Spent the week camping at this beautiful beach. Was the first time in a VERY long time that I took time completely away from the market. Well…
…I MAY have glanced at my phone a few times to see some quotes. But for the most part, I was completely disconnected. Safe to say when I returned home and started working on this prep, I was blown away by some of the moves certain names made.
$ES / $SPY
ES really picking up steam now. The further we extend, the more cautious I become on starting any new long positions and the more I start to look for other names that are getting extended for possible fades. This can obviously continue much higher before having any sort of meaningful pullback, but it doesn’t have to. Will see where we’re opening up Tuesday morning and take it from there. If we’re gapping up, chances are most of my initial trades will be to the short side. 4400 area has both the monthly and quarterly pivot stacked there. Support would initially be the annual pivot at 4276.5, then the 20d/monthly pivot around 4240ish.
$NQ / $QQQ
Nasdaq extending a bit, but definitely not as much as the S&P at the moment. But keep in mind that can change in an instant. Upside resistance wouldn’t be until close to 15000. Support below would be the 20d/monthly pivot at 14200 area.
Once again, my thoughts here haven’t changed. The longer we go sideways, the healthier this becomes. Review previous few week’s thoughts for details.
TOP INDUSTRY GROUPS
BOTTOM INDUSTRY GROUPS
STRONG STOCKS LOOKING FOR CONTINUATION
I know you’re wondering how a stock that had a big drop like this on Friday made it onto this list. It’s simple. ZOOM OUT!
Weekly shows that this stock recently breached an important trendline and is now pulling back to retest some key levels. I think any flush down into that 136-137 area offers a great spot to try and get long. Notice how I also have an alert set for if we are to eventually break back over the recent highs of 152.84. Over that level and I think this has the potential to be a long term swing for a possible retest of the ATHs.
This idea can be played as both a day trade AND a swing. The weekly chart does a nice job of showing the continuation setup clearly.
Zooming in on the daily chart, you can see the areas where I would want to wait for an entry. If you are looking for a day trade, any flush down to 113 area should offer a nice bounce opp. But if you are thinking about the swing, I personally would want to wait for the 50d/20d area around 112. I like this feature in TradingView that allows you to visually display the r:r balance and how to size appropriately for your account size. In this example, I’ve used a theoretical $50k account risking 1% of your account on the trade. Therefore the risk is $500. So if you enter at 112, your stop goes under the 108.88 lows and you take 160 shares. I know it doesn’t sound like much, but if the trade works and ends up going to the target up at 119, you would be up $1,120 on the trade. Not bad for only risking $500 initially.
Love this chart. Pulling back to major trendline support as well as the psychological 50 level. Over 53.76 will get me looking to buy dips for a trend join. But I still may also look to buy any flushes that come down hard into the annual pivot around 50.
OVERSOLD REVERSION SETUPS
Nothing really catching my eye for this particular setup, but you could make the case that the above idea on $IBM fits alright in here as well.
Weak Stocks Looking for Continuation
This name is really struggling every time it pushes back up towards the 20d. Feel like if we lose 74.30 it could give a 72.90 test and below that, it could get ugly. I think you could wait for those triggers and then short pops on the name. No need to anticipate anything here. I think longer term this might have a date with that $40 level.
Overbought Reversion Setups
This name is one of the ones that blew my mind when I saw what it did while I was away on vacation. Shorts truly took a beating on this one. That’s the real danger with these low floaters. Such a low amount of supply and price can get really really crazy. But for a cash flow negative company that doesn’t have a lot of capital left, a move like this is a blessing for them since they will most likely fire off a secondary offering in the coming days. They still have $37m left on their current shelf.
Can clearly see that the trend is still intact though. There is no reason to get in short as long as we are still frontside of the move. All major extensions are reverting back to the trend and finding buyers. Wait till we get some clear lower highs and lower lows so that you can have defined risk on the trade.
That’s it from me. Hope you all enjoy your 4th of July and the long weekend. Stay safe and I’ll see you guys Tuesday morning, ready to slay!