Month: January 2022

We’re continuing our neutral bias and laying out critical inflection points that can guide us moving forward. Over the last few weeks, we laid out a key level for the S&P 500 (ES) at $4,743, broke it, and saw the recent pullback. 

On the weekly chart, the ES pulled back to the weekly 21 exponential moving average (EMA) and bounced off this marker. 

On the daily chart, the ES gained support and ripped off the Ichimoku Cloud top.

Overall, we are in neutral territory since the recent drop was due to comments from the Federal Open Market Committee (FOMC). The next meeting will be Wednesday, Jan. 26, at 2 p.m. Eastern which could be the next catalyst for a push higher… or another pullback. 

Heading into the next FOMC meeting, one zone we’re watching is the top of the daily Ichimoku Cloud near $4,600 to $4,620. If the ES treads above this range, we shouldn’t see too much danger to the downside. If it starts to break this Cloud range, we could see a drop to the $4,500 psychological level at the bottom of the Cloud.

Remember we’re here to set the tone, define key levels, and use inflection points to lay out a road map for the weeks ahead.

Stay Focused!

In today’s video, we’ll lay out a road map and analyze what could occur in the week ahead. Last week the Federal Reserve event caused a decent selloff and began this drop in the S&P 500 (ES). Regardless of the news, we want to lay out inflection points to guide us on which direction we should be focusing on. 

Our biggest focus this week is on the daily Ichimoku Cloud. It’s printing a Cloud top near the $4,600 range for the next two weeks. If the ES continues to trade near these ranges, we could see it rally back up, similar to the last time the ES bounced off the daily Ichimoku Cloud.

There are two catalysts that could impact the overall market this week – Federal Reserve Chairman Jerome Powell will be speaking Tuesday morning and the Core CPI numbers will be released Wednesday morning.

In today’s video, we’ll dive into our major focal points for the overall market that will help gauge the market’s next moves. 

Stay Focused!

Last week we saw cash rotating out of big technology, specifically the QQQ, into energy, the industrials, and the financials. This little bit of rotation has left the QQQ trading at key support, with a daily squeeze that could potentially fire to the downside. 

On the weekly chart, the 21 exponential moving average (EMA) has been the key level of support throughout this entire push, and last week the QQQ closed below it… 

If the QQQ loses this level of support at the weekly 21 EMA, we could see a nasty drop. 

Keep in mind that we don’t need to trade big technology and big semiconductors, unless of course the structure is there. Instead, let’s see what names do well with rises in interest rates.

Stay Focused!

What an “interesting” week here for Wall Street. The Federal Reserve minutes released on Wednesday caused nasty panic selling across the board, with technology taking the brunt of it.

The weekly QQQ chart has spent the last six weeks trading in a wide, volatile range. It pushed down to the bottom-end, and as soon as it looked like the bears had control, the QQQ ripped right back to the upside.

At the close on Friday, the QQQ held support at the bottom of the range, which points toward the potential of yet another violent (for bears) bounce back to the upside. We won’t know more until Monday, but make sure to not “marry your ideas” here. If that big level of support ends up breaking, it could certainly see technology, and the market, trading lower.

Our major focus at the moment is on managing open positions as opposed to aggressively looking for new exposure. There continues to be solid structure within the semiconductors (SMH). As far as big technology goes, AAPL remains king-of-the-hill in terms of trend, structure, and momentum properties.

As goes the market, goes the stocks. Tech stocks are so heavily weighted in our market indexes that a break of support for that group could lead to downside in other groups. Our suggestion for now is to respect the importance of the QQQ and patiently wait for confirmation of its next move before jumping into new long positions. 

We’ll cover a handful of interesting setups and charts in Sunday’s video and see if our scan results can offer any clues as to where the next round of opportunity could be.

Stay Focused!

You’ve probably heard about scalping before, but what exactly is it? 

Scalping allows you to take advantage of quick, explosive, high-percent return moves that happen every single day in the market, regardless of overall conditions. It can help a trader survive and even thrive during choppy, volatile times. Scalping can be used to hedge and manage your overall account, or can be a stand-alone strategy. 

One of my favorite aspects of scalping is it allows you to trade the market without having overnight risk or being at the screens all day. Show up, attack, enjoy life. 

Today, I want to share my go-to rules and tips when it comes to trading one of my specialties, scalping.

When is it best to scalp? 

The best times to scalp are generally in the first two hours and the last two hours of each trading session, as more volume occurs during that time. However, a great setup can unfold at any time, just be picky if there is a lack of overall volume.

How do I choose my strike selection?

When scalping options, I focus on using the same week contract expirations, as they provide the most volatility and movement in value. For strike selection, I focus on playing slightly out-the-money (OTM) and at-the-money (ATM) contracts.

What mindset do we need as scalpers?

We want to focus on percentage gains and hitting price targets rather than on dollar gains and emotions. One of the most overlooked aspects of trading is emotions, but this can also be the most threatening to your account.

Some key tips I like to remember when scalping: 

• Always respect your rules and trading plan. 
• Do not scalp in chop. 
• Wait for key inflection points and zones to raise your probability and edge.

If you’re interested in learning more about scalping, check out my Options Scalping Secrets class where I deep dive into my go-to scalping setups including how to prep for each trading session, how to find key levels and zones on charts, and how to use all my favorite scalping indicators together.

Stay Focused!