Can’t believe it’s already getting so close to the end of September. We’re quickly closing in on the end of the 3rd quarter. Everyone always loves to finish the year off with a strong 4th quarter and I hope you’ve been having a killer year. But if you’re struggling, make sure that you understand that it is your job as a trader to continually be reviewing and refining, each and every day. Improvements don’t need to be saved for New Year’s Resolutions! You need to wake up every morning and have the goal to be just slightly better than the person you were the day before. Small gains add up over time and even just being slightly better every single day can produce MASSIVE results by year’s end.
Make sure you guys are paying attention to the Midweek Watch put out every week by Goose! He has been on a real heater and I would be lying to say that his precision has been pushing me to make sure that all of my Sunday Preps are of the highest caliber as well.
Last, but not least, make sure you are checking out the Instagram show me and Kim Ann Curtin, The Wallstreet Coach, are putting out called Method & Mindset. Last Thursday was episode 3, featuring Cody. These are all stored on the TrueTrader Instagram channel, @TrueTraderNET. If you would like to be a guest on the show, DM the TT insta channel and explain why you think you would be a good candidate for the show and some of the issues in trading that you have been struggling with. Also, make sure to check out www.MethodandMindset.com, a website we put together hosting over 7 hours of free content from both me and Kim. You will find all sorts of extremely useful material over there. Value overload is the GOAL!!!!
$ES / $SPY
Last week we saw quite a bit of heaviness to the market. Last Sunday Prep called for pops back into the underside of the 20d to be treated as possible areas of resistance where we could look to get short. As you can see we breached this trendline that we’ve been holding since last year. I still don’t think it’s time to panic as there are still plenty of levels below us that I think offer really strong support. The first level is that 4364 level that was the base from late July thru August. Just below that is the previous month’s pivot as well as the August low at 4347.
Remember, we haven’t broken the previous month’s lows for over a year now. If we were to lose August’s lows, that would be a definite red flag for me and I would begin to monitor pops back into levels to see if sellers really start taking control.
The weekly chart really becomes important to me in times like this. From this point forward, I am watching the pushes up to see if we can get above last week’s highs but fail to ever make new ATHs. IF that were to happen, then we may be putting in a lower high on the weekly chart and at that point, the break of the recent lows would validate that lower high and I would start to move most of my long term stuff into cash. The weekly 20sma would be the first real level of support if that scenario were to play out.
As far as levels of resistance, I would still watch all pops back into the underside of the 20d as well as the 4500 level. I personally would love to see a retest of the quarterly pivot at 4512.25 since that lines up real nice with our major breakdown area. A test of that level that stuffs would give you the lower high on the weekly chart that we were just discussing.
But keep in mind that after this large pullback last week, the early part of this week may be a relief bounce and there are plenty of charts that have pulled back to support. So there are still long opportunities in the market, especially if we are going to push off last week’s lows.
$NQ / $QQQ
The Nasdaq chart is actually a lot less concerning. There are still some serious levels of support that look ready to be tested. That 50d/quarterly pivot area around 15150ish looks strong. It would be a retest of the recent base that it broke out of and would actually be healthy for us to test, hold, and then find some strength.
The weekly 20sma is still quite a bit always though, so if we were to try and push up this week and end up putting in a lower high, if we were then to roll over and head lower we have quite a bit of room to tumble. Remember, I’m not alarmed yet, but I MUST be prepared for all scenarios.
When you get monthly charts like the ones of the /ES and the /NQ, it’s pretty evident that at some point things need to cool off. And when they do, we will either need to go sideways for a while and digest the move up, or we will need a decent correction to reset. Are we seeing the beginning of that start to unfold? Won’t know until we see some more things occur. But we can definitely make preparations and be aware of the warning signs.
As far as levels of resistance for this coming week, the 15300-15400 area looks pretty thick. But if we get above there then the underside of the 20d is the next area where I will look for sellers to show up. The 15550 level also is of interest to me.
We broke above that 47400 level pointed out last week so we confirmed the higher low and we should be all clear for a 53k retest. Remember though, these valid long triggers create the most powerful short triggers when they fail. What do I mean by that? I mean that if we fail to get to 53k and instead break below the lows from 9/7, then watch out below.
Utilities and Materials were absolutely hammered last week and their corresponding ETFs really show it ( $XLU and $XLB ). Energy had a really strong week and their ETF ( $XLE ) actually looks pretty strong at the moment. Consumer Discretionary ETF ( $XLY ) also looks really strong.
Strong Stocks Looking For Continuation
The name doesn’t have a ton of range, but this breakout that it triggered last Thursday makes me think that with the right entry, this could be a swing, so intraday range doesn’t become a concern for me. Love the volume on the name the last 2 days as well. It really helps me have some confidence that there are institutions getting involved here. Friday’s low/monthly pivot around 28 is the first area where I might look to scoop some weakness. But it really wouldn’t surprise me if this first needs to retest the breakout area of 27.50, so the plan for me would be to start at 28 with the ability to add to my position if it continues lower to that area. At that point though, I would need to start to see some higher lows put in and constructive price action. If it wants to stay heavy, I have no problem taking it off and looking for re-entries around the 20d if it wants to give them to me.
Have a nice flag forming up here right above the retest area of the last big breakout from earnings. Had a strong day Friday. I think the no-brainer long level is an emotional flush down to the 50d with risk under Thursday’s lows, but I honestly think if it were to come down to mid 73s and buyers show up, I would be ready to get involved in that area. If we break out above the upper trendline of the flag, I would be looking to buy dips as soon as I see some higher lows forming.
Love the look of this weekly chart. Currently holding the weekly 20sma as well as the breakout area from this retest of the cup.
Would either look for a flush into low 84s for an opp to scoop an opening flush or would look to buy dips if we break over Thursday’s highs.
Oversold Reversion Setup
This swing idea was posted back when the stock triggered in mid-July. This is the first real pullback to get attractive prices on the longer-term swing setup. But it also may provide a great day trade if we can flush lower emotionally this week.
Will be looking for an emotional flush down towards the 130 area for the first shot at scooping some for a day trade. Quarterly pivot is just below at 129.31. If these levels can’t hold, I have no problem cutting it and looking for re-entries down around 126.
Weak Stocks Looking For Continuation
Watching for a hard pop into the underside of the 50d/quarterly pivot in the low 101s for a fade.
Don’t think this one will set up till mid to late week. But the plan is to see how we get back into the 200d. If we were to pop hard into that area I would play the fade into it as it would also put us around a 50% retrace of the big move down. If that doesn’t hold, then I would look to revisit around the underside of the 20d/monthly pivot/quarterly pivot/61.8% fib level.
Would either like to short an emotional spike into the underside of the 20d/50d or I would look to short pops if we were to lose the psychological 100 level which would also be last week’s lows.
Overbought Reversion Setups
Was short this name on Friday and had nice gains that I never locked in because I am looking for the bigger move. Will be watching this week to spot lower highs and an area to get short with defined risk.
Interested in shorting a spike back into the 85 area or joining trend if we lose Friday’s lows.