Last weekend I was at Traders4ACause in Las Vegas where I gave a talk on what it is I feel are the key things you should be doing in order to ensure your survival as well as give yourself the best opportunity to thrive in the markets. I also was blessed with the opportunity to listen to a TON of other traders that are much smarter than me give speeches on many other topics, ranging from systematic sizing to new things that prop firms are trying out that are having impressive results.
There were some very key takeaways for me. One of them was from a good friend of mine, and an amazing trader with a superb track record, Joe Fahmy (@jfahmy). He pointed out that one of the major keys to success is to be grateful. At first it may seem strange that that concept would rank so highly for trading. But when you start to think deeper about the concept, it makes more and more sense. It’s all about keeping the right mindset. I often preach #GratitudeIsTheAttitude. It is impossible to be grateful AND angry at the same time. Just try it, I dare you. Mindset is EVERYTHING in trading, and if we can always just be mindful of our emotions and keep them in check by always recentering around gratefulness, we will have a much easier time staying in the right mindset.
Another key takeaway was the importance of surrounding yourself with really good losers. This was from Nathan Michaud (@Investorslive), and I have to agree with him 1000% on this point. Our job as traders is not to be right all the time, but instead to quickly identify when we are wrong and protect our capital. Major drawdowns are oftentimes the main reason why many traders can never seem to gain any real traction. They string together a bunch of decent wins, and then give it all back with 1 or 2 losses. If we could just find a way to prevent the big drawdowns, it would do wonders for our accounts. So getting REALLY REALLY REALLY good at losing is of the utmost importance.
If you want to watch all of the speeches in their entirety, as well as many other speeches from prior events, then head over to www.impact.traders4acause.org and for an annual donation to the cancer research fund they have set up, you can view everything.
Also, make sure you set your reminders for Thursday, 5pm EST/2pm PDT for the next episode of Method & Mindset with me and Kim Ann Curtin, The WallStreetCoach. As usual, it will be hosted on the @TrueTraderNET Instagram channel. In the meantime, head on over to www.methodandmindset.com to view hours and hours of free webinars covering a wide variety of topics both mental and technical.
We have officially entered earnings season, so there will be TONS of stuff in play. Remember, the ideas covered in the Sunday Prep are for names that are NOT reporting this week. If you need help learning how to prepare for earnings reports, I recorded a webinar on this very topic. It can be found here.
$ES / $SPY
We’re still technically extended on the monthly timeframe, but we’ll soon be in November and that monthly 20sma will once again creep up a bit higher. As that happens, the downside risk becomes less and less. I’m not naive enough to think a big correction HAS to stop at the monthly 20sma, but it will always remain the first objective target if that is the timeframe we are extended on.
Zooming in to the weekly timeframe you can see that we have technically made it back to ATHs, but we have yet to break above and hold in any sort of convincing manner. We very well may this week, but until we do, I think it’s just as likely we stuff up here and retrace a bit. The move up has been without any real pullbacks and I think the chances are high that some chasers up here need to be shook out first.
Moving onto the daily timeframe, you can clearly see the levels of support below where we are currently trading. I would start to lean into some of the long ideas if we were to retrace back to the 20d. But until then, I will really be stalking the short ideas as I think that bias will offer the edge. If we hold up here and go sideways for a few more days, maybe the move up will have digested and we can then push from here, but this move seems a bit overdone for now.
$NQ / $QQQ
Nasdaq was a bit of a lagger last week even though it’s pushed up towards highs as well. But it has still yet to clear some major resistance up here and has already begun to look toppy. If we can’t get above last week’s highs, I really think some of these extended tech names will make great short targets. Just like the S&P, if we retrace back to the 20d, I will begin to get interested in some long setups.
Bitcoin finally broke to new ATHs and everything looks great up here. If this can give some pullbacks to levels of support, there are going to be some crypto-related equities that offer good long setups. Remember, this chart could easily be set up for a much larger push higher. If too many people remain crypto-skeptics, it could lead to some big squeezes. Eyes will be on $MARA, $RIOT, $COIN, $SOS, $BTBT, etc.
Oil and Energy names continue to look REALLY strong. We have some nice high and tight flags built in both ETFs as well as many of the equities. Will be looking for possible long setups in these sectors.
Tech still looks vulnerable and I will be stalking lower highs and some way to get short with defined risk on individual tech names if this ETF and the $NQ can roll over.
Financial sector looks great, but it’s a bit extended up here. I would love a pullback to support before looking for long setups in individual bank names. I feel like getting long up here is just gambling and you’ll have a higher chance of getting stopped out only to see it pull back to support, hold, and THEN push higher. Patience is key.
STRONG STOCKS – CONTINUATIONS
This stock loves to make these nice controlled retraces before heading higher. Friday had a clean breakout of this base that it’s been building and now a 50-61.8% retrace puts us right into the retest of the breakout area. Not thinking this has to happen Monday. Could easily be something that develops through the week. But I want to keep this on radar.
This name has been respecting the 120m20sma very well. We just had a really nice break to new highs on Friday so I would like to see an early flush Monday down to the 63.80 weekly pivot (this is where the new weekly pivot WILL be on Monday) for a nice spot to scoop. Stock has great range.
I know Goose is gonna love me for putting this one on the list, lol. This name has really been acting well even while the retail sector has been flat-ish at best (with the exception of $M of course). I would take a shot on a flush down to 42ish, but if that area can’t hold, I would still be VERY interested in getting long this name if it can test the weekly 20sma down around 40. One thing to note is that I wouldn’t be caught dead long this name if it loses 38.70. I feel like under that level and this thing very well may test the 200d way down at 34.
Both $PSX and $PXD are on watch for these little flag breaks. Have alerts set on $XOP and $XLE for a heads up that the sectors are getting the same push. If we get the signals, I will be interested in buying dips to join trend. Keep in mind that $PSX reports earnings Friday before the bell.
OVERSOLD STOCKS – REVERSALS
I think this is going to be a great opportunity on this name if we can get these prices. This all stems from a major short trigger that occurred back in 9/28. It was a short setup based on the weekly chart and the monthly timeframe was where we were extended. This setup has the monthly 20sma as it’s target. This level also coincides with the quarterly pivot as well as the highs from the base that was built from August to November 2020. If we get these prices I will look to daytrade the name, but it will also be a swing position that I start to build in down there as well.
Yet another gigantic move down on a strong name brought to you by a valid short setup on the weekly while being extended on the monthly timeframe. Even though I want both this and $PYPL at their respective monthly 20 sma’s for my entries, I will not hesitate to jump in these long if I see intraday price action that shows me there may be a reversal happening. But I really do think that $SNAP has at LEAST a $50 magnet on it. We’ll have to wait and see.
WEAK STOCKS – CONTINUATION
I have 2 spots where I would like to take a shot on the fade for this name. The first is a pop back into the annual pivot at 77.94. If that area isn’t holding price down, I have no problem stopping out and looking for a re-entry from 80.5-81.
This name sold off after their earnings where they revealed that they are really feeling the impacts the supply chain disruption. I think any pop back into the 220 area is a good spot to try to fade the name with risk over the 220 area.
I want to short any big push up into the underside of the 20d/monthly pivot around 52.50. Highly doubt this sets up till a bit later in the week, but making sure it’s on my radar.
This name is definitely getting a bit extended up here. I would REALLY love it if we can get a big gap up and push higher to just give it that A+ look for the short. I’m not here to guess tops on this name. Will be waiting for lower highs and the ability to have defined risk on the name.
Same idea as $APO. Would like it to extend further toward 140-142, but am not about to try and guess tops. I will wait for lower highs and some levels to set risk against.
$AMD reports earnings Tuesday after the bell, so I will not have a position heading into the numbers. This idea is for a day trade. This name has been trending up the 120min20sma and has pushed up pretty hard right into ATHs. I feel like if the market wants to roll over, this name is vulnerable. Will be watching $XLK and the $QQQ for clues. A break under Friday’s lows gets me interested in shorting pops back into resistance. Very well could come back down towards the 20d, but would be locking gains at key levels along the way.
Interested to see if we start to find some lower highs on a shove up towards 372-375. If we do and the market gets heavy, would look for this to roll over. Same idea applies to $LOW, but no need to have both in the Sunday Prep. Will be monitoring both names.