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.
Stay Focused!
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.
Stay Focused!
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.
Stay Focused!
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).
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.
Stay Focused!
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.
Stay Focused!
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.
Stay Focused!
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.
Stay Focused!
While this week was nothing but a boring chop-fest, the structure of the market still looks promising for a push into new highs over the next couple of weeks. The daily squeeze in the SPY (shown below) looks like it’s close to firing to the upside. And the QQQ (chart below) has finally recovered a bullish structure to its daily chart with a squeeze of its own and positively stacked exponential moving averages (EMAs).
Right now it feels as if everything is squeezing: SPY, QQQ, the Dow, and IWM have daily squeezes, and if that isn’t enough, almost every major sector ETF is setting up in daily squeezes as well (IYR, XLE, XLF, XLI, IYT, XLK). What this tells us is that across the board the markets are building up tremendous energy inside these squeezes and sooner or later that energy is likely to be released in the form of a run higher.
These are the moments in time when we need to get positioned in the cleanest setups the market has to offer and hang on tight (as long as they hold structure) in anticipation of a big move to the upside, fueled by the overall market’s squeeze.
We’re locked and loaded with put credit spreads in GOOGL and CAT (charts below), both of which performed well this week. GOOGL is looking like it could be our next $20K trade, although adding to the position at this point would be less than ideal. We’ll be holding onto these positions until we get our moves to new all-time highs or until we collect 75% of max profit on the spreads (whichever comes first). MMM, AMZN, and MSFT are also of interest right now and we’ll cover those in detail in this Sunday’s premium video.
Though our major focus is on the directional-opportunity that we believe is just around the corner, we never hesitate to collect some easy premium if the market is doing nothing but chopping itself silly. This week we sold iron condors on SPX and NDX, selling calls and puts slightly further out-of-the-money than this week’s expected move. We were able to collect 80% of the max profit on each of these condors, good for a little more than $2,000 of “low-stress weekly income.”
This makes two consecutive weeks that we’ve collected some nice profits by selling condors, but we certainly are looking forward to the potential of these squeezes firing!
Enjoy your weekend, rest up, and we’ll talk to you this Sunday in the premium Watch List videos.
Stay Focused!
The Market is not really getting anywhere this week; however, we do have some great key levels in play and some nice squeezes gearing up for the next move. News made an impact for some stocks such as SQ, so for right now individual setups are best while we wait for a market-wide move.
Watch the video above for in-depth coverage of these individual setups such as: TSLA, FB, BA, and NVDA.
Stay Focused!
We continue to use the daily Ichimoku Cloud as a guide to see where the market will go next. The Cloud has been able to show us a pattern and we can utilize that information to plan our moves.
Here is our focus list:
SQ – News on Monday read “Square Plans To Offer Business Checking, Savings Accounts.” As we’ve learned before, news has an impact on the market. We are watching the 4-hour squeeze and 4-hour Cloud. If SQ can break and hold 211.5, we’re looking for 217 then 221.78/220C, which is a really nice option.
TSLA – Currently breaking into a 4-hour Cloud. If it can hold 606, we’re looking for a move toward 627 then 650.
ABNB – Setting up a really nice wedge on daily and 4-hour charts and a 4-hour squeeze with a 4-hour Cloud are also in play. If there’s a breakout, it could make a move toward the 4-hour Cloud top and right around 145/150 levels.
BA – Breaking a big daily downtrend, we’re looking for a push toward 241 and 244.65.
Stay Focused!