Hope everyone had a great weekend. Last week, as expected, we really saw the small cap world light up. I don’t anticipate that to change this week nor anytime in the near future. So, much of my day trading will be focused on those. These nightly preps for the large caps become THAT MUCH MORE IMPORTANT now so that I don’t have to use my mental capital on them during the trading hours. I set alerts and when they hit, I already have my plan and I act accordingly. This allows me to have slower trades working for me while I am able to focus on the small cap trades that I take that undoubtedly require more of my attention. #PrepOrDie
$ES / $SPY
And the ascent continues. The grind up has really just become mechanical at this point. Dips are very controlled and cause no real reason for longs to panic and if there are any macro shorts left then they are all just being slow-cooked to death at this point. The more this continues, the more I begin to feel like the only way this ends is in some sort of parabolic speed up. Until then, I think it’s business as usual. Support below is the 20d followed by the quarterly pivot at 4400 and after that you have the 50d. Above there isn’t much resistance other than the monthly up at 4543.75. If and when we eventually do speed up, there’s no need to pick a top. Those blow off moves always have very distinct characteristics that make it so there is no reason to step in front of them until the author TELLS you it’s time.
$NQ / $QQQ
Exact same thoughts from $ES can be applied to the $NQ. Support is below at the 20d/quarterly pivot at 15125ish, followed by the annual pivot at 14993 and below that you have the 50d. Above there is the monthly pivot at 15534.75 and then the quarterly pivot at 15704.25.
Check last week’s notes and you’ll see we found support right where it was expected. The move still looks like bulls are in control and barring any unforeseeable events, no reason why they can’t eventually get up there to test that 57000 area. I think that area will still take another 2-3 weeks to be tested, but our job is simply to follow the progression as it unfolds and plan accordingly.
Remember last week when we said even though Energy has been weak that doesn’t mean we necessarily want to short it because the sector was a bit oversold? Yeah, this is the power of combining these numbers with the sector ETF charts.
$XLE Comparison from 8/22 Sunday Prep vs 8/29 Sunday Prep
Look at the $XLE chart now! NOW I would consider getting short some energy names that have been weak and are bouncing into areas of resistance.
Whereas Healthcare has been a strong sector but had a down week. Well, let’s look at the $XLV chart…
…pullback to support. So this may be a sector where you can possibly spot some strong names that are basing at support and look for pushes higher out of those bases.
Strong Stocks Looking For Continuation
Remember how I ALWAYS remind you all that I don’t trade crypto, but I trade crypto-related equities? Yep. Here ya go. Action has looked really nice on this one as of late. Will be watching for early weakness to scoop. A 50% retrace of Friday’s move puts us right into the highs from Thursday around 38.5. There’s a chance any morning flush might not quite get there and instead may bounce off that annual pivot around 39. I very well may start there and be ready to add if it continues down towards my next area. Make sure you have the $BTC chart up when you trade any of these names as they will be very correlated.
Love Friday’s daily candle and the fact that it bounced so strongly from that spot. Will be looking for either a dip towards 178 to scoop or if it wants to push off the open then I will look to join trend on dips.
AMD triggered the long for me on Friday but never gave a dip to buy afterwards. So I’m still waiting for that dip. First area I would like to try to get long would be a retest of the trigger at 110. If that area doesn’t hold the next spot I would take my shot is the 20d. If we push strong off the open on Monday then I may look to buy dips and join trend.
Oversold Reversion Setups
This is one from the previous week and has now triggered the reversal. The lows are either in or they aren’t, meaning your risk is 100% defined. Ready to buy dips for the swing back up towards the 20d with risk under the lows. Size accordingly.
DollarTree isn’t there yet for me, but another day of selloff and I will probably be looking to get long this name for a bounce. The way it closed on lows Friday makes me think we might see one more puke lower. Will have to wait and see if she gives it to us.
Weak Stocks Looking For Continuation
Ugly candle on Thursday and then rolled over midday Friday to give back most of the day’s gains as well. Thinking that under Friday’s lows and this can start to come in towards 45-46. Will wait for the break of Friday’s lows and then short pops to join trend.
Remember, Energy sector had the bounce back into resistance. Here is a name with decent range and volume that is coming into some levels of resistance as well. Will be interested in a push back to 75 or if that doesn’t hold, the next spot I would try to fade would be the 50d/200d/monthly pivot area at 77.
Really wasn’t easy to spot too many ugly charts out there. All of last week’s ideas still hold true from this section as far as the levels they need to lose where I will see them as weak: $FUBO under 24.5, $BLNK under 29, and ARKK under 113. But I didn’t think it was worth it to go and rehash all those ideas. Just know that I still have alerts and will be stalking them.
Overbought Reversion Setups
In no hurry to step in front of this name as I can easily see it being a move that could have 300+ written all over it. But staying familiar with it in case it does that in an emotional manner and gets extended. There can really be an argument made for putting this name on the “Strong Stocks Looking For Continuation” section with the ability to buy an early flush if it holds some levels.
(From last week’s prep still on watch as well to see if it gets some more extension)