Month: December 2021

The market is setting up unique opportunities this week and next as we anticipate the Equity Index Roll (SPX Roll). This is an important event that occurs every quarter and takes a toll on the market, so it’s important for traders to be aware of this. 

The SPX Roll is when big money, firms, and institutional players sell and close out their current positions and “roll out” to longer-term expirations. The roll began today, Dec. 9, ahead of expiration on Friday, Dec. 17. 

With this in mind next week, we will see periods of selling off across the market. Be mindful that if price action randomly starts to drop or pop, this may just be a sign of SPX Roll. What is more important is that we focus on our ranges to see if selling is just a result of the rollover or if the market is making directional moves.

In the video above, we’ll define these key ranges, discuss setups on our focused list, and define areas of opportunities to look out for as the market rolls on.

Stay Focused!

The overall market is in play after ending last Friday on a vulnerable and volatile drop. We’re prepping and watching specific levels to determine where the market is heading. 

The S&P 500 (ES) is pinching between two levels, holding the 50-day simple moving average (SMA) and rejecting the 21-day exponential moving average (EMA). 

There are three major compasses we will use to navigate this market… 

1. The first bullish step is seeing if the ES can hold the 50 SMA. 
2. Look for the ES to break the 21 EMA and continue to trade above it. 
3. Eyeball the trendline that is forming to visualize next potential moves. There is a good chance the ES will break out of this wedge and head toward the zone from $4,549.60 to $4,592.00.

Here is our focused list:

GOOGL — Bottoming at the Ichimoku Cloud and lingering near the 50 SMA. Focus on $2,788 as this was the level that ripped GOOGL to new highs. This is a good place to buy the dip at the Ichimoku Cloud and play it up past the 21 EMA. Look for GOOGL to hold $2,850 to $2,888.

SHOP — We do not have a bias either way, but there is great potential for a dip buy ideally at the 200-day SMA at $1,357. Look for a move to $1,470, $1,500, and $1,520 this week.

Stay Focused!

Once we have a better understanding of where the indexes and volatility will go from here, then we can focus on building a watchlist of individual stocks. I’m still holding my long positions on AMZN, NFLX, and TSLA and took profits in our AAPL trade in the Compounding Growth Mastery this week. The key level we’re focusing on right now is the 21 exponential moving average (EMA). 

Watch the video above for a full rundown on the structure of the major indices and which scenario would result in a bullish or bearish trend.

Stay Focused!

As the markets continue to sell off, we are sticking to a simple game plan as we work through this volatility. We have a key level, and we know exactly what to look for at that key level in order to make our next round of trade decisions.

Here is what we’re looking for on both the upside and the downside.

BULLISH SCENARIO:

Key Level: Weekly 21 Exponential Moving Average (EMA)

In order for this bullish trend to continue, we will look for the SPY and QQQ to find support at the weekly 21 EMA. In a bullish uptrend, a dip to the weekly 21 EMA is often a great buying opportunity.

The key here is that we see support at the mean along with a big flush in the Volatility Index (VIX). If that can unfold, the last piece of the puzzle is to see momentum shift to bullish across all lower time frames. If and when this unfolds, we will look for the market to continue the trend to the upside.

BEARISH SCENARIO:

Key Level: A weekly-close under the 21 EMA

In the event the indexes get a weekly close under the 21 EMA, that is the first potential sign that the trend is at risk of shifting to the downside.

After a close under the weekly mean, we would wait for the first oversold bounce to the unsold. If that oversold bounce gets rejected at resistance under the weekly 21 EMA, we would look to short for a flush back to the lows.

During volatile times, anchoring your decisions to key levels such as the weekly mean can make your job of being patient, disciplined, and prepared for the next move that much easier.

Stay Focused!