Let’s walk through how to build a watchlist not just for individual stocks but for particular sectors.
While we primarily like to base our scans on the squeeze setup, there are many good looking trends in sector groups that could be overlooked due to focus on the well-known tickers like TSLA, GOOGL, and FB.
The financial and communication sectors are groups that have shown strong trends and daily squeezes that offered us great setups in the Compounding Growth Mastery. In the next few weeks, we’ll be focusing on sectors that are setting up in the buy zone and could provide a nice set of opportunities.
Watch the video above to review the individual sectors and learn how to build a watchlist for high-probability setups.
The trend is your friend… you just need to know how to find it!
As traders, it is easy enough to fall in love with certain stocks as the years go by. The danger of this is that our favorite stocks and sectors aren’t always going to be “in play.”
For example, technology has been one of our favorite sectors to trade this year; however, we only enjoy trading technology when it is setting up for our ideal entry. Rather than force the trade and break our rules, our mindset is to trade anything that fits our criteria and ignore anything that doesn’t.
While technology has offered many profitable opportunities for us over the last few weeks, we’re heading into the weekend with the group too extended for us to take new entries (chart below). While we wait patiently for a pullback in technology there are a few other trending sectors setting up at the buy zone right now.
QQQ Daily Chart
One of our favorite sectors is healthcare — XLV. This has one of the better trends in the market and we took an entry this week in the Compounding Growth Mastery as it pulled back to the 21 exponential moving average (EMA) with a brand new daily squeeze. Charts within the group such as UNH, LLY, and others are setting up nicely here and could provide a nice set of opportunities over the next few weeks.
XLV Daily Chart
Another favorite of ours is the financials — XLF. This is an example of another great trend finally presenting a fresh daily squeeze at the 21 EMA. We’ll be keeping an eye on setups on GS, JPM, and MS for entry opportunities in the weeks to come.
XLF Daily Chart
In this Sunday’s video, we will walk through our process of identifying the best sectors and trends to swing trade. Just as important we’ll show how to find the best setups within each sector. Trend, structure, and momentum are the only things we want to focus on as traders. Once you know how to consistently find the best combination of “the “big three” — trend, structure, momentum — the game gets a whole lot easier.
It seems all week the market has been waiting for the Nonfarm Payroll Report (NFP) tomorrow morning. The market showed a similar pattern to last week, with a strong start on Monday and chopping into the rest of the week ahead of another jobs report. Last week, the market had a bullish reaction to the news and exploded on Friday. We’ll be using the same compass as last week, the 4-hour squeeze on the S&P 500 (ES), to gauge if this latest jobs report will act as a catalyst for a move higher or lower.
Be patient on Friday following the NFP report and and ahead of the long holiday weekend as big money could be gone for the week, in which case we could continue to see choppiness.
Stay mindful of these potential catalysts because a bullish reaction could push the market through all time highs (ATH) and rally prices higher. Watch the video above for levels we’re watching in the major indices and key setups that we’ll look to take advantage of tomorrow.
Every time the market dips it turns around and grinds higher. We saw the same pattern on Monday as the bullish market broke through all-time highs and pushed higher. Be patient, be smart, and size down now that the market is in an extended move. Wait to enter key setups until the market can reset itself, but also watch to see if it can continue higher.
Here is our focused list:
ROKU — Retreated after earnings, sitting in a 4-hour squeeze on Monday. Technology is spiking higher, but ROKU is still lagging and hasn’t made a move. Use the 4-hour squeeze as a compass. Since tech is extended, be patient for the move to take longer. Watch for ROKU to keep holding the $352 level toward the upside zone at $367. Be patient for it to break the 200 simple moving average (SMA) to boost higher.
MRNA — Down due to recent news, so keep a close eye for a move in either direction. If it breaks the key zone from $363 to $369, it could drop to $350 for a good short opportunity. If it keeps holding the key zone, we’ll look for a push up to the $390 to $400 range.
TSLA — Showing strength with the daily squeeze starting to fire on Monday and a weekly squeeze trying to release. Gapped out of the weekly wedge so it could explode higher. TSLA hit $730 on Monday and as long as it is above that, there is a strong chance that it will push higher to $753 (and up to $780).
GME — Starting to set up, broke the downside trend and 4-hour squeeze on Monday. If it can get through $217 to $227, GME could start to explode. Could be a great setup to allocate some lotto risk.
MSTR — Heavily relies on what BTC is doing, which is turning around after a pullback. If BTC starts to rally and retests highs, MSTR could also rally. MSTR is currently sitting in a wedge at the daily mean at $695, looking to pop and explode higher. If it can break through the wedge and holds $690, look for a push through $750 up to $800.
Let’s take a look at high-probability setups we’re watching as we head into the new month of September. We’re keeping an eye on three main things that make up a strong setup: trend, structure, and momentum. We’re watching setups on AMD, TSLA, and AAPL as they all have those three things in common. We’re big fans of the semiconductor sector as it hit an all-time high on Friday with its weekly squeeze.
So long as the path of least resistance is to the upside, these are the types of setups we’ll be looking to trade heading into the next few months. We’re looking forward to start another week and month strong!
Surprise! We’re switching it up this week with a special walkthrough of this morning’s scan results using both the thinkorswim® and Simpler Trading scanners. Using a quality scanner makes finding high-probability setups to add to our watchlist easier and quicker.
Keep in mind what makes up a strong setup: uptrend, good structure, and momentum intact. Watch the video above for a full look at our daily squeeze watchlist that we’ll be focusing on the next few weeks.
And if you’re interested in learning these setups and turning them into real-time trades, check out the Compounding Growth Mastery program. We hope you enjoyed this Watchlist Special, and we’ll see you in Sunday’s video!
All eyes are on the Federal Reserve Jackson Hole virtual event tomorrow morning starting at 10 a.m. Eastern shortly after the market opens. There’s much anticipation going into the meeting, so we’re expecting a volatile and eventful end to the week.
The devastating news overseas and the uncertainty around tomorrow’s Fed event dragged all three major indices lower today and increased volatility in the overall market. Rather than watching our Focused List as closely, we’re mostly focusing on the overall market, specifically the S&P 500 (SPX). We’re looking to take advantage of moves that line up with our key price targets (listed in the video).
One name we will be watching is GOOGL, the strongest leader of the technology sector. This Big Tech darling has continued to rally and held up its progress thus far. We’re keeping an eye on ROKU to continue our rinse-and-repeat setup of buying the dip if ROKU opens and holds at the $352 key zone. The last name that deserves some recognition and patience is SNOW, so watch the $292 level to see if it can push higher.
For now, let’s focus on the overall market and see how tomorrow’s Fed event plays out. Will we continue to chop, boost higher, or will negative news send the market lower? Either way, let’s be mindful of volatility and look to take advantage of our key levels.
The biggest catalyst we’re watching this week that could affect the market is the Federal Reserve (FOMC) Jacksonhole event (moved from an in-person to a virtual event) that could cause a big move to the upside or downside.
All three major indices have been showing a similar pattern of dipping, recovering, and hitting new all-time highs. In the S&P 500 (ES) specifically, we’ve seen a dip buy at the 50-day simple moving average (SMA). If the ES doesn’t turn around at the 50 SMA it tends to reverse at the daily Ichimoku Cloud. The Nasdaq (NQ) showed the most strength with moves down to the lowest dip and back up to the highest all-time high. We’re staying bullish and looking for the market to move higher.
Here is our focused list:
GOOGL — Very strong heading into this week. Fired hard Friday into Monday, breaking its all-time high into the psychological level of $2,800. In a beautiful daily squeeze, look for a retest of the all-time high zone at $2,775. Could move up to the psychological level at $2,850.
ROKU — Looking for a reversion to the mean above $380. Currently underneath the daily Ichimoku Cloud, so watch for it to break above it for a big push higher. As long as it is above $352, we’re bullish and staying patient to see if the squeeze triggers.
NVDA — Looking choppy post the stock-split, yet setting up a daily squeeze that fired on Monday. Exploded higher through the session. We don’t want to chase it, since it has already made the big move. Looking for a potential dip-buy.
ZM — Has dropped lately. Pay attention to see if ZM can dip below the hourly Ichimoku Cloud and work back up to its daily mean at $355. After that, watch for it to move toward key levels up to $364.
The market tends to drift toward the downside after any big spike in volatility like what we saw on Monday last week. If and when the volatility index (VIX) dies down, the market will typically bounce right back. With the S&P 500 (ES), Nasdaq (NQ), and Dow Jones (YM) setting up with bullish daily squeezes, the path of least resistance is to the upside. All three major indices are setting up bullish, so there are three main components that we want to focus on when searching for high-probability setups.
We’ll be looking for a combination of three main things to make up a solid setup: trend, structure, and momentum. Watch the video above for a review of how to utilize these three components in your trading and a run-through of some good-looking setups like AAPL, FB, and GOOGL.
After a short-lived spike in volatility earlier in the week, the markets are entering the weekend with regained support above the 21 exponential moving average (EMA) and therefore the trend, momentum, and structure continues to be bullish in our book.
We’ll be looking for the daily squeezes in SPY and QQQ to take us into new highs as long as the bullish daily squeezes hold (see charts below).
ES Daily Chart
NQ Daily Chart
Any time the market spikes in volatility, sudden selling pressure follows. When we get this abrupt selling pressure it is incredibly important to keep an eye on the volatility index (VIX). If the VIX continues to go higher and higher, the probabilities point toward the market dropping lower and lower. However, when VIX quickly begins to retrace, as it did this week, we tend to see the market bounce back and continue the current trend.
Keep an eye on VIX next week, but for now all looks proper.
VIX Daily Chart
If the bullish trend in the market continues over the next few weeks there are a handful of daily squeezes that we will look to take advantage of for setups. One of our favorites is NOW, which we entered on Wednesday in Compounding Growth Mastery.
FB, AAPL, and GOOGL all present clean setups right now and will be at the top of our watchlist heading into next week, as they are poised for solid moves if the QQQ and XLC grind higher from here.
FB Daily Chart
AAPL Daily Chart
These are the types of setups that should serve us well over the next few weeks if these squeezes in the indexes fire to the upside. In this Sunday’s prep video, we will cover these setups along with a handful of others that look poised to make solid moves in the short-term future. Until then, enjoy your weekend and we will talk to you on Sunday!
