Month: December 2021

This week has been the champion’s owl of economic events. Our focal point has revolved around understanding these events, how they impact the market, and how to thrive in this market.

The essence of “quad-witching” – expiration of equity and index options along with futures – is to keep the market in place. When the market pops (or drops) quad-witching brings the market back to the mean.

A big level we’re focusing on during quad-witching is point of control (POC) because of its connection to liquidity. POC is the biggest level of liquidity, and we can expect price to move back and forth to these major liquidity zones during quad-witching. This is why we’ve seen the S&P 500 (ES) continue to retest its POC at $4,685.

After quad-witching ends tomorrow, we can turn our focus to the 2-day squeeze starting to form on the ES. We plan to use this squeeze as a compass for whether the Santa Rally will occur and send the market higher or squeeze to the downside.

Stay Focused!

We have a stacked week of significant events that could prove more difficult to trade than usual. It’s important to understand what these events are and when they are occurring so we understand price action better and stay out of trouble.

Here are the upcoming economic events we’re anticipating this week:

Wednesday, Dec. 15:

• Retail sales
• 1 p.m. Central Federal Open Market Committee (FOMC) meeting with Chairman Powell press conference

Friday, Dec.17:

• Quad-witching: Expiration of equity and index options along with futures
• Option Expiration (OPEX)
• S&P 500 Indexes rebalancing
• Nasdaq 100 rebalancing

Traders who aren’t aware of these events will have more skewed expectations of the market, especially with anticipation of the Santa Rally. By being aware of market events we are more ahead of the game and can prepare for opportunities.

Protect your account, stay patient, and size down until normal price action comes back (when we’ll be ready to attack hard). 

Here is our focused list:

GOOGL — Started the week with a reversion to the mean at the daily 21 simple moving average (SMA). GOOGL has a weekly squeeze with a gap to fill from $2,904 to $2,877, the bottom being the 30-day SMA. See if GOOGL can hold the daily mean and head toward last week’s numbers in the $2,980 range for a dip buy opportunity. If it moves to the downside, look for it to fill the gap and hit point of control (POC) at $2,863.

NVDA — Closed down 6.7% on Monday. If NVDA breaks the key level at $280, look for it to move to $271 toward the Ichimoku Cloud. We could see a bounce from $280 to $288 up to $300. Keep an eye on the semiconductor index (SMH) to understand if its overall sector could boost NVDA higher or add pressure to the downside.

SHOP — Dropped to the 200-day SMA on Monday. If we revisit the $1,380 area, we could see a decent dip buy opportunity. Look for it to work its way back toward $1,500.

TSLA — Has a gap to fill on the downside from $944 to $910. If TSLA can’t bounce at these levels, look for it to get to POC at $1,017 and revert to the mean from there. 

Stay Focused!

The bulls regained some control last week, as the S&P 500 (ES) and QQQ (NQ) traded above the 21 exponential moving average (EMA), in a bullish daily and weekly squeeze, and with stacked EMA’s and green 10x bars. This push in the indexes could lead the market to brand new all-time highs. 

Heading into the week, watch the 4-hour squeezes in the ES and NQ which could set the tempo for a big move. Keep in mind we have monthly expiration and the final Fed meeting of the year, which could lead to back-and-forth action in the short-term.

In today’s video, we’ll review clean setups that we’re looking to add exposure to, as well as scenarios that need to happen before we can take action on certain names.

Stay Focused!

The bulls fought back with vengeance this week, reclaiming structure to the daily chart. At this point, the weekly and daily squeezes in the indexes look poised to take us to new highs into the end of the year and early 2022.

One potentially powerful setup we’re seeing right now is the “triple squeeze”. This occurs when a stock is in a squeeze at the same time as squeezes occurring in its sector and the overall market.

One example of this is NVDA. It’s currently printing a daily squeeze, right along the SMH (Semiconductor ETF) and the overall market, the SPY and QQQ. Other examples of this currently are MSFT, GOOGL, AMZN, and GS. These triple squeezes will be our major focus into the end of the year.

Remember the domino effect at play. If a daily squeeze can fire, it can trigger the 3-day squeeze in the process. If the 3-day squeeze fires, it can potentially trigger any squeeze on the weekly time frame. Momentum on momentum. AAPL is the poster child of what can happen when nested squeezes form (a move we took full advantage of).

The major indexes, big semiconductors, and big technology are squeezing. Together this could offer one final big push into the end of the year. We’re still holding swings in AMZN, QQQ, and AMD and are looking for our next spot to add exposure.

Stay Focused!