Happy Sunday Traders!
With the current structure of the daily squeeze in the SPY, we are looking for several weeks of upside momentum to capitalize on. We are also looking for a move in SPX into $4,250, which lines up with a new all-time high (ATH) at +2 average true range (ATR) on the daily chart.
The best swing trading takes place when the market itself is firing a squeeze, so now is the time to buckle-down and focus on getting positioned in the highest probability setups. A squeeze in the index means that most stocks may move higher, but you still want to be strict in focusing on nothing but your “go-to pitch” with setups that fit all your criteria.
As always, focus on stacking probabilities in your favor as much as possible. A daily squeeze for the SPY already indicates a high probability for a move upward across the board, but we want to focus on catching this momentum in stocks that have a high-probability structure that are part of a sector with similar high-probability alignment.
CAT is a perfect example of stacking the probabilities in your favor. The structure of the setup itself points toward a move higher and the sector it belongs to (XLI) has the same structure as well. Now, take into consideration the structure of the SPY, and you’ve found a setup where the odds of a move higher are stacked in your favor across the board.
Stay Focused!