The market hit an all-time high (ATH) and then chopped, so now we turn our attention to Quadruple Witching and keeping an eye on point of control (POC), as the stocks will likely be bouncing on and off of POC. Another thing to keep in mind is the Federal Open Market Committee (FOMC) address this upcoming Wednesday the 16th.
Here is our focus list for the week:
AAPL – Daily squeeze firing. We can see it potentially reaching 132-134.
NVDA – Through ATH and could continue to run. Broke a wedge on Friday and fired a 4-hour squeeze.
FB – Breaking a nice downtrend wedge, could push more and go through ATH.
GOOGL – If it continues to break ATH, it could easily work its way toward 2,500.
ROKU – Breaking a big wedge and also the daily Ichimoku Cloud. It could run toward 400.
SHOP – Breaking a big downtrend wedge. It could run toward a daily gap fill at 1,360.
As we keep looking for more upside in the market, it’s important that the stocks we are trading are part of a sector that has held its bullish structure over the past few weeks and will likely continue to do so.
While we saw signs of distribution in industrial and transportation stocks last week, the technology and semiconductor names still look poised for a move higher. With four-hour squeezes currently firing long, and new 30-minute squeezes setting up in both GOOGL and QQQ, we’ll be playing those 30-minute squeezes for the push into new all-time highs.
It’s “make it or break it” time for the market this week, as the odds of us moving higher will start to dwindle if the back-and-forth action continues.
The total chop-fest continued in the markets this week, even as the SPY (shown below) grinded to a new all-time high (ATH). Not much action to say the least as we go into the weekend, once again eagerly awaiting some momentum.
Chart of SPY
While the indexes were mostly flat/choppy this week, there were some pockets of the market that saw some nasty selling pressure, such as industrial stocks and transportation stocks. Take a look at names like UPS, FDX, and even CAT (which we traded profitably three times over the last few weeks). Despite their prior leadership, the bullish structure of each of these charts (shown below) broke down this week.
Chart of FDX
Chart of CAT
We are still looking for a move higher over the next few weeks for the markets, but observations like this are important, as we want to identify which group of stocks in the market are most likely to lead the way. While industrials and transports lost structure this week, we think technology (QQQ) kept up well, and is still poised for a move into new highs.
Chart of QQQ
GOOGL continues to be our favorite pick when it comes to the tech names, and after closing over $15,000 of profits on the stock last week, we have initiated a few new positions here. As long as the QQQ continues to look poised for a run into new highs, we will be looking for the current 4-hour squeeze in GOOGL to fire long and push the stock toward (another) new high in the $2,450-$2,460 range.
Chart of GOOGL
We’re on the road this week, so we weren’t able to be as active at the charts as we’d typically like to be. However, we’ll be back to work this coming Monday, ready to take advantage of any potential momentum the market may (finally) have to offer! In this Sunday’s watch list video, we’ll dive deeper into the analysis of QQQ and GOOGL, and will take a look at a few other charts that are catching our eye, like PLBY and COST.
With the market reaching that long anticipated all-time high (ATH) and then failing hard, the question becomes, “Now what?”
The biggest thing to watch and focus on is the S&P 500 Index (SPX) roll. While this is happening, we can expect some big pops and drops. Now is the time to be picky, be fast, and to focus on A+ setups.
A reversion to the mean (RTM) can be seen as a healthy reset for stocks. So while the status of the market seems to still be “pending” there are a lot of great A+ setups we can take advantage of this week.
Here is our focus list:
NVDA – Nice squeeze under all-time high (ATH). Keeping an eye on stock split confirmation to see if it will continue to push higher.
GOOGL – Strong after a RTM last week. If it breaks 2404, then it has a chance to test ATH.
SQ – Basing at 200-day simple moving average (SMA) and forming a wedge. If it can clear 220, then it has a shot toward 223, 227, and 230.
SNOW – Breaking big resistance near 244. If it can break through 253, then we’re looking for a move toward 262.
BYND – Its daily wedge is breaking. If it breaks through 156, then it can possibly test 163 and 170.
Phase one of the squeeze, or “the buildup of energy” phase, is underway. During this phase, our job is to identify the cleanest setups the market has to offer and to begin building our positions. Phase one can last longer than we typically think, so be sure to give trades ample time until expiration.
As long as the indexes hold their bullish structure inside their daily squeezes, phase two of the squeeze, or “the release of energy” phase, is expected to bring us into new all-time highs. This should provide the momentum we need to make some profitable trades. During this second phase, tech stocks like GOOGL and MSFT are looking poised to lead the way.
The chop fest continued this week; however, the structure of the markets leads us to believe that a big move into new highs is just around the corner.
During phase one of the squeeze (the buildup of energy phase) the iron condors we’ve been selling over the last three weeks have been a great source of weekly income while making our jobs of sitting on our hands that much easier. This week we were able to close a little over $2,000 of profits from our condors.
Though the markets lacked any meaningful momentum this week we were still able to walk away with profits on our swing trades. This is one of the benefits of trading strategies like credit spreads… you get paid with the passage of time!
We were able to close both of our put credit spreads on CAT for 75%+ of max profit (good for $2,000), as well as our GOOGL spread (both shown below). We closed GOOGL this afternoon for just about 80% of max profit, which was good for a $15,300 profit (P&L below).
CAT Chart
GOOGL Chart
P&L for GOOGL Trade
Both CAT and GOOGL still look poised for moves into new highs, as do a few other names we’ll be covering this weekend in Sunday’s prep time video.
The name of the game is patience right now. Patience to wait for ideal entries, patience to sit through the chop, and patience to let your trades unfold in your favor.
Phase two of the squeeze (the release of energy phase) feels like it’s just around the corner, and that’s the move (driven by the indexes) that we believe will provide our next round of profitable trades. Stay tuned for Sunday’s video, as we’ll dive into some setups we’ll be looking to trade over the next few weeks.
The overall market chopped in place this week, but finally made a really nice reversion to the mean, met with a strong dip buy opportunity. Some big names like NVDA and GOOGL are also nearing dip buy levels.
Patience is king but this could be a very good opportunity for some dip buys into next week. The Nonfarm Payroll (NFP) job report in the morning is a big catalyst to keep an eye on. NVDA also has a stock split vote coming up, so something else to keep in mind.
The market is moving sideways, and does not seem to be able to make up its mind about pulling back or rallying higher. Normally we would look into intraday squeezes; however, most of them are not looking very clean right now so our focus is shifting to key levels. There are also some market catalysts such as earnings and investor meetings that are important to review.
Here’s our focus list for the week:
NVDA – Investor meeting on Thursday to vote on stock split. We’re keeping an eye for a continued push through all-time high (ATH) toward 670.
GOOGL – Stalking some squeezes on this one. If it can break 2400, then it has a shot toward ATH.
ROKU – Struggling with the daily Ichimoku Cloud. If it can hold up at the 50 simple moving average (SMA) and break back through 360, then it has a chance to head toward 380.
ABNB – Watching for a chance to buy the dip near 140, and seeing if it goes back above 146 to work its way toward 150.
SNOW – Watching for a chance to buy the dip below point of control (POC). Looking for it to break the 244 zone. This could be a big possible move if it happens.
SHOP – The four-hour squeeze is setting up quite nicely. Watching for it to break 1300, to see if it can work toward 1330 and 1360 to fill the gap.
Tech is setting up structurally for a push into new all-time highs over the next few weeks, as it has regained a bullish structure with a fresh daily squeeze, positively stacked exponential moving average (EMA) points, and support above the daily 21 EMA.
If we are looking to benefit from any potential momentum in tech stocks, we need to do so with the cleanest setups possible. GOOGL and FB have been clear leaders here, however they are too extended for new entries.
MSFT and AMZN look promising for potential entries as they have yet to make the 2+ average true range (ATR) move that GOOGL and FB quickly made. Watch the video above for more.
