We had a really good week over in the alert room last week, and this week has proven to be a bit more challenging so far. The bigger picture is still intact across the big names, the short term is the open question, and I have a couple of brand new trades to cover. Let’s take a deeper look at the Snowflake squeeze trade and the rest of the book:
The full walkthrough is in the video below, with every chart I reference.
Three Closed Trades Paid Last Week
SPCX gave us a pretty good move on a couple of the $150/$145 put credit spreads, so I cashed out of both. I took a chunk of that profit and rolled it into a further out of the money call debit spread for December expiration, what I call a house money trade. If you missed how that one started, here is last week’s SPCX house money trade breakdown.
On the pullback to the 21 EMA, SPCX has to hold that level first. If it does, I’m looking for another short-term buy trigger and possibly a $155/$150 put credit spread, with patience.
ARKK was a few of the December $90 calls, with the goal of catching a move to $95. The high of that candle was $94.82, and we called that close enough for government work. I took profit on the $90 calls and rolled into an out of the money call debit spread for December.
Apple was a day trade off the squeeze. We were in on that candle, caught the pop, took our paycheck and hit the road.
The old Snowflake trade was a buy on the trigger into the close and a profit on the gap up the next morning.
The Snowflake Squeeze Trade Finally Has Momentum
For today’s action, we are back on board with the Snowflake squeeze trade, playing the Big 3 Squeeze with a put credit spread for November expiration. You have the big gap up on the earnings report, a pullback into the buy zone, and the trend fully intact.
The holdup as of late has been momentum. Of the big three, trend, structure and momentum, the first two have been really good. They got a negative MACD shift around mid August, and every pop up until today came with a negative MACD. They kept on trying, and now they finally have momentum and the buy trigger.
Why the Snowflake Squeeze Trade Has One Level to Watch
In a lot of ways this makes for a simple trade. The exit rule on the Snowflake squeeze trade is one level: if they pull back and take out that $332 area, I take off the trade and move on to a different idea. If they hold it, the pattern has room to play out.
Dell Gets a Few More Days Above the 21 EMA
I jumped into Dell yesterday on the squeeze. The plan with that kind of entry is to take it to bed and catch a gap up the following morning, ideally a move into $595 to $600.
Dell has been a little more feisty. It failed the breakout and pulled back to a couple of key levels, including support near $550. As of today’s close, it is back above the 21 EMA. I’m not in a big rush to buy more tomorrow, but with a $575/$570 put credit spread, if they hold above the 21 EMA, I’ll give it a few more days to work.
NVDA and QQQ Failed the Breakout, Not the Pattern
NVDA and QQQ are both based on the squeeze, and for now you have to look at both as failed breakouts. NVDA took out the $230 area and poked its head into a brand new all time high. When the energy in a squeeze finally releases, it can usually give you a move to the third ATR target, about $255 to $260 here. Instead, it pulled back into the range.
Frankly, nothing has really changed. Good structure, a Big 3 score of 14 out of 15, and I would like to buy more. The trigger to add would be a short-term buy signal, and then I’m back in with more of the December $200 calls.
QQQ is in the same boat. Good momentum, good structure, no breakout yet. Things would change on a move back below $700. Until then, I have the December $700 calls, and I’m looking for the same short-term buy trigger to add.
Micron and Google Are Next If the Trigger Prints
Micron needs more time. The squeeze there leans neutral bullish right now, and we don’t buy neutral bullish, we buy perfection. Structure and trend could be better, and the real kicker for the eventual breakout is momentum. No trigger, no trade. If I wake up to a green arrow, I’m looking to buy it with what could be pretty big size.
Google has squeeze on squeeze action, with a squeeze on pretty much every chart I watch. The range has been choppy, which is very normal while a squeeze builds. If the MACD line gets back above zero and it triggers the green arrow, that is the one I would eventually love to buy, and I can work into bigger size there.
QQQ, SMH, AMD, Micron, NVDA, Google: big names, big squeezes. If they wake up with short-term buy triggers, I look to buy.
I want the trigger before I add size, on every one of these names.
Stay Focused,
Taylor Horton
Earnings season turns a lot of trades into a coin flip. My colleague Allison Ostrander is showing how she trades earnings gaps with clear rules and defined risk, live Wednesday, October 14 at 6 PM CT. Save Your Spot.