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Another crazy week for the markets is in the books and both the Nasdaq (NQ) and S&P 500 (ES) closed at brand new all-time highs (ATH) today – and the Dow hit 35,000 for the first time ever. While the market looks incredibly bullish from a chart perspective, this recent rush higher has masked a lot of the selling pressure bubbling below the surface.

The small caps, Russell 2000 Index (IWM), and sectors such as energy and transports continue to break down and lose structure. At this point, this entire market is being driven by big technology stocks, rather than finding strength across the board.

 

 

 

Next week should be an incredibly important one for the market as technology stocks are set to start announcing quarterly earnings. Will the market continue to rally after earnings? Or, is this nothing but a huge push into the announcements before we finally top out?

How high this goes is the big question at this point. While we have no plans on shorting technology or the S&P 500 (SPY), we certainly don’t have any interest in taking large risks with the market so extended. Therefore, we will be going into next week waiting for a pullback to offer fresh potential for high-probability entry opportunities.

The semiconductors continue to look phenomenal here with a beautiful weekly and daily squeeze setting up (see chart below). We already have some exposure in the semiconductors with our position in AVGO and we will be covering a few more that we are keeping an eye on in this Sunday’s video.

 

 

This is a fast-moving market and with that comes the need to stick to your rules now more than ever. This week we opened a position in NET and took profits two days later as it ran through the 2+ average true range (ATR). In this wild market, could it have continued to rally? Absolutely! With the markets extended, is now a good time to get greedy? Absolutely not!

 

 

Focus on clean setups, stick to your entry and exit rules, and scale down in position size until the next meaningful dip. That’s our plan for now! Keep an eye out for Sunday’s e-letter, where we’ll get into the details of the next few setups we’re looking to trade.

Stay Focused!

 

 

After an anticipated drop and quick pop this week, now it’s time to observe what is setting up next. Whenever we approach the 2 to 3 average true range (ATR) bands, we can expect a pullback. Every downside move is simply just a dip buy, until proven otherwise. We’ve had diminished volume over the past few days, so the markets aren’t completely out of trouble, but where do we go from here? 

To gauge where we are heading tomorrow, keep a close eye on the 4-hour Ichimoku Cloud and the hourly squeeze forming on the overall market – in the S&P 500 (ES). Use these squeezes to your advantage, so you can stay out of trouble on Friday, especially with big earnings coming up next week. As long as we hold this key zone at the point of control (POC) at 4,341, we will remain bullish. If the squeeze fires to the downside, we will be looking for a push back to the daily mean at 4,313. 

Be patient and stay disciplined to end the week. We’ve seen a great drop, a great pop, and so we want to stay out of trouble as the market moves sideways and looks for direction. Watch the video above to see where I think the markets are heading next. 

Stay Focused!

 

 

We are finally seeing that much needed pullback that we’ve been patiently waiting for! We’re nearing the 2-3 average true range (ATR) Keltner Channel bands, which signals that the market is extended and close to a healthy pullback. That is what we are seeing play out now. If you’ve been listening and following along with Focused Trades, this reversion shouldn’t be much of a surprise. Pay close attention to the Nasdaq as the technology leader should drive the market higher.

Here is our Focused List:

NVDA: Pay attention to the price action after the stock splits into four on Tuesday to a $187.75 stock price. Will we get a big rip, a big drop, or will it stay neutral?

ZM: Finally breaking above the daily Ichimoku Cloud and experiencing its first healthy pullback. Possibility here for a dip buy. Looking for a pop back up to the daily mean at $370.

ROKU: One of the names that closed green and a name to keep an eye on for a move higher. If it breaks the 30-minute Ichimoku Cloud, we can expect a reversal. Looking for it to hold above $410 and above the 30-minute Ichimoku Cloud. Key levels at $420 to $425.

TSLA: If it breaks above the 30-minute Ichimoku Cloud, we could see a rally.

FB: Sitting under the 30-minute Ichimoku Cloud, looking for it to rally above.

Stay Focused!

 

 

The S&P 500 (SPY) and Nasdaq (QQQ) futures closed under their daily 8 exponential moving average (EMA) last week. This sets us up to see a potential flush down to the 21 EMA.

If we revert to the mean (at the 21 EMA), this would be our first “meaningful” dip in weeks. This could serve as our next opportunity to enter a long position if the markets hold support there.

Bullish sectors like technology and semiconductors came down to earth with the overall market last week. These are the first two spots we’ll be looking to potentially buy this dip, as both QQQ and SMH, the technology and semiconductor futures respectively, continue to look incredibly bullish on a weekly chart. Watch the video above for more details on what we’ll be keeping an eye on this week.

Stay Focused!

 

After a few new highs and a lot of back and forth action this week, the markets showed some potential signs (see charts below) of setting up for a pullback to the daily 21 exponential moving average (EMA).

 

 

 

The Nasdaq (NQ) and S&P 500 (ES), the QQQ and SPY futures respectively, closed underneath their daily 8 EMA today. This type of action opens the door for a potential reversion to the mean (at the 21 EMA). That’s going to be our major focus next week, as a dip to the 21 EMA would be the market’s first healthy “reset” in weeks.

Should we dip to the 21 EMA, patience will still be warranted. The reversion to the mean is the first step. The second step is for the markets to confirm support at that level. The third step is to start looking for entries in the cleanest setups possible.

At the top of our watchlist are the technology and semiconductor sectors. Technology has been the clear leader as of late, and a dip to the 21 EMA could serve as a good spot to look for new entries for any potential last-minute move higher into earnings. As for the semiconductors, that weekly squeeze is one of our favorites right now (see chart below).

 

 

Any downside here could serve as a great opportunity to get long in the areas of the market we are stalking, but we won’t rush into entries right away. In this Sunday’s video, we’ll cover a few of the technology and semiconductor setups to keep an eye on and prepare for the week ahead.

Stay Focused!

 

 

The markets have been running up, and as we’ve been sitting at all-time highs (ATH) it’s finally time for a pullback. Any time we approach the 2 to 3 average true range (ATR) Keltner Channel band, take this as a sign to pump the brakes. There are still opportunities to enter long positions, but be very timely and methodical around this high territory. Understand we’re approaching levels of resistance, and the markets need a healthy pullback. 

While there are times that we can run through this 3 ATR level, we want to focus on moves that provide consistency that we can build a reliable trading business around. Be patient, and attack the market day-by-day until we have an efficient reset. Check out the video above for a detailed view of how to prepare for this rotation with confidence.

Stay Focused! 

 

 

With a largely anticipated earnings week coming up we are mainly looking at market sectors that affect the Dow Jones Industrial Average (YM). Pay attention to the rotation that could potentially happen as large banks like Wells Fargo and Goldman Sachs kick off the earnings week (and also the potential rotation after their earnings report). Keep a side eye on the Taiwan Semiconductor Manufacturing Company (TSMC) to see if there is any additional impact on the chip sector affecting the Dow Jones. While technology could continue higher we should see some rotation, depending on how earnings go, which should send the YM higher. Overall, be ready for earnings, Federal Reserve news, and potential rotation!

Here is our Focused List: 

GOOGL – If breaks all-time high (ATH) can work its way toward 2,580. Relatively strong for technology

ROKU – Nice bounce off the daily mean. Watching a squeeze and push toward 445 to 463

SNOW – Firing daily squeeze. Watching 1-hour squeeze to fire and continue through 272 to 280

NVDA – Perfect bounce off daily Ichimoku Cloud. See if it can carry momentum toward ATH. All eyes on stock split next week

Stay Focused! 

 

 

With the markets still extended, now is the time to scale down in position sizing, while still focusing strictly on the cleanest setups (in the strongest sectors) of the market.

While technology is the clear leader at this point, the extended charts of AMZN, MSFT, and others in the technological sector do not offer attractive entries at these levels.

The semiconductors, however, do look like attractive entries here. SMH has our favorite combo: a weekly and daily squeeze, both of which have the bullish structure we’re looking for in this market.

Over the next handful of weeks, we’ll be scoping out opportunities in the semiconductor space in setups like AMD, TSM, and others. Check out the video below to get a full rundown of our trading plan for next week. 

Stay Focused!

 

Happy Friday, traders!

Another week in the books, and we’re continuing to see the same theme we’ve seen over the last month: crazy bullish and crazy extended. The markets continued their wild grind higher with another push into new all-time highs (ATH), with no signs of slowing down.

 

 

This week, we nailed a great trade on AMZN, as we came into the week with a 4-hour squeeze firing off the 8 exponential moving average (EMA). We entered on Tuesday morning after the opening bell and closed out the trade quickly, as we bought back the put credit spread yesterday for 70% of the max profit ($7,400). This is a smaller position size than usual, but we are happy to take advantage of opportunities like this in an extended market.

 

 

While we would love to see a healthy pullback before getting aggressive with larger position sizes on our long trades, there’s no guarantee we will be gifted one. What we can do for now is pick our spots wisely and simultaneously decrease position sizing.

As we optimistically wait for a reversion, we’ll be watching a few weekly squeezes next week in names like SMH, AMD, and SHOP. These all have a very bullish structure that fit our criteria perfectly. If the bullish party continues, these are the kinds of setups (as always) that we’ll be focusing on. In this Sunday’s newsletter, we’ll break these setups down in more detail and cover our game plan moving forward.

 

 

Enjoy the weekend and Stay Focused!

 

 

With the market finally giving us a much needed pullback, it’s time to step back and analyze our next opportunities! We’ve been waiting for this to happen for a while now, so let’s take a look at where the markets are now. 

We’ve seen the markets rally higher every time prices hit the daily Ichimoku Cloud, and now we have finally seen them gap down. The question is, how low will they drop? The major indices can be used as a compass to determine direction, looking at the S&P 500 (ES), Dow Jones Industrial Average (YM), and the Nasdaq Composite (NQ). The YM continues to drag the markets down as the lagging sector, and investors shifted their focus on the NQ. 

We can use the intraday and 4 hour clouds as a guide to see if prices will continue to move lower or if we continue to the mean. We can use Keltner channels as well in order to establish when we should buy the dip. Now that the markets popped and reset, it’s a patience game to see where we will go next. Focus on the key zone around Tuesday and Wednesday’s lows for a sign to rise to an all time high or revert back down to the daily mean.

Keep a tight focus on VIX, ROKU, NVDA, SHOP, SNOW, and AMZN. Check out the video above for a more detailed view of the markets.

Stay Focused!