After bank earnings last week, we’re starting to get into the gist of earnings season. Technology names are slowly beginning to report this week, including NFLX, ASML, and TSLA.
Last week was a volatile and short week, as the S&P 500 (/ES) bled into a new zone.
On Monday, the /ES created a new low at $4,355.
It started to trend up and form a higher low structure. Until the market breaks this structure, we want to focus on this trendline that formed on Monday.
In the video above, we’ll lay out new liquidity levels, identify the latest market trendline, and draw out zones using our favorite indicators.
Here is our focused list:
NVDA — On Monday, NVDA closed at point of control (POC) at $219. If NVDA can’t get through $219, look to short the stock down to the key zone from $209 to $206. Our next targets are below from $200 to $195. If NVDA pops at $219, look for it to fill the gap from $226 to $230. Pay attention to how tech earnings go.
SHOP — Could rally to POC at $605. Look to short SHOP when it reaches POC. If it breaks above $605, look for a pop to $630.
GOOGL — If GOOGL breaks its premarket low at $2,520, it could drop to the inflection point at $2,490. This level could become a nice dip buy opportunity to POC at $2,600.
Taking a quick break from my “vacation” to update you guys on the setups we’ve been trading over at Simpler! With a focus on our buy signals, let’s take a look at some of the cleaner trends in the market.
There are still PLENTY of great trends out there in the market, IF you know where to look! Let’s take a look at a few we’ve been trading latley, a few setting up for new entries.
Heading into April, let’s make sure we’re focusing on the best trends the market has to offer, while waiting for everything else to improve. Using my bullish checklist, here’s a look at a few of the sectors looking good for more upside.
We have a busy but short week ahead of the holiday Easter weekend.
On Tuesday morning, the consumer price index (CPI) report is released, which is the start of our catalysts this week.
Premarket on Thursday, there are a number of bank and semiconductor chip names reporting. Also look out for the retail sales numbers to see if it could move this volatile market.
The S&P 500 (/ES) was sitting in a major key zone from the March Ichimoku Cloud top at $4,510 and the April Ichimoku Cloud top from $4,455. This is our line in the sand and the biggest zone we’ll be focusing on.
Here is our focused list:
SHOP — Proposed a 10:1 stock split, SHOP hit point of control (POC) at $644 on Monday. If it breaks through $630, look for a pop to POC. If it doesn’t pop, look for SHOP to drop to $600 and hit our downside targets at $585, $574, $555, and potentially $540.
AMD — At a massive inflection point at $99.23. Our downside target range is from $95 to $92. Ideally, look for a pop toward the $99 level. If AMD holds $99, this could be a dip buy to $102.
NVDA — Gapped down on Monday. See if NVDA reaches the $209 to $206 level that it has continued to bounce off of. If it pops toward $221 to $225, this could be a short opportunity. Above this range, our next target is $231.
To find out more about Simpler Day Trading and our open positions, click here.
The Multi-10x indicator has become a useful tool in our trading arsenal. This indicator has helped narrow down our focus list to only the cleanest setups.
Multi-10x (upgrade to the original 10x Bars) was created by Simpler Trading as a way to monitor trend quality and strength so that we can understand momentum better.
The Multi-10x bars are calculated by underlying ADX and DMI indicators and put directly on the chart so the decision-making becomes instantly simpler. The bars are shown as either green, yellow, or red.
To break it down simply:
Green Multi-10x bars = bullish momentum is increasing
Yellow Multi-10x bars = momentum is neutral (no strong directional conviction)
Red Multi-10x bars = bearish momentum is increasing
AAPL Daily Chart
In the image above, you can see green Multi-10x bars on the top left corner of the screen. This shows bullish momentum across multiple time frames: the monthly, weekly, 3-day, and daily time frames.
How do we use Multi-10x?
We want to trade in the direction the Multi-10x bars are signaling, as that implies the best probability of success to trade.
When it comes to yellow bars, we want to either avoid those setups or use non-directional strategies until a stronger conviction of direction is established.
The Multi-10x bars complement the squeeze indicator as together they can confirm whether we want to stay in a trending stock or exit early.
Multi-10x versus original 10x Bars:
The original 10x Bars show colored bars that help identify trend direction and conviction quickly. This indicator is sold separately from the new Multi-10x. The Multi-10x indicator signals trend strength and direction in 18 different time frames shown as green, yellow, or red boxes at the top left corner of the chart. We can use this indicator to pinpoint entries in breakouts and to avoid “fake out” moves.
For more information on purchasing the 10x Bars or the Multi-10x indicator, click HERE.
Settings:
Below you’ll see an example of the settings I have on the Multi-10x indicator. If you want to change the time frame, simply click the “period” options and choose the time frame you’re looking to add.
Example:
Let’s take a look at an example of a clean setup that fits the bill of my trading criteria, specifically with positive momentum shown by the green 10x bars.
As technology started to regain bullish structure on its daily chart, GOOGL formed a beautiful daily squeeze that fit my criteria. On May 18, 2021, I sold an at-the-money (ATM) put credit spread while GOOGL set up in a daily squeeze. I sold the put credit spread, looking for GOOGL to ultimately fire the squeeze long and run to new all-time highs.
ENTRY 5/18
SOLD -25 VERTICAL GOOGL 100 18 JUN 21 2290/2270P @ 8.13
On June 4, 2021, I bought back my put credit spread for 75% of the max profit. Though the run to new highs didn’t quite unfold, the $100+ move I caught locked in 75% of the max profit on the spread.
The max loss on this trade was $28,675. The profit on this trade was $15,225.
GOOGL Daily Chart
Now that you know what the Multi-10x bars are and how to use them, we hope you can add these to your trading tools to get an additional edge. If you’d like a deeper dive into how I use the Multi-10x bars with my strategy, check out my Compounding Growth Technique four-hour strategy class.
Be sure to check out our Sunday weekly watchlist video for actionable setups that are supported by trend, structure, and momentum.
While the overall market was mostly sloppy this week, we saw some great continuation in the trends we mentioned in last week’s newsletter, such as energy, consumer staples, and health care.
As far as energy (XLE) goes, the daily squeeze looks poised to fire long here, which should be good for a strong push through $80+. With such a solid structure to the ETF (Exchange Traded Fund), the individual names like EOG, DVN, and CVX look ready to run higher as well. At the moment, we’re long XLE call debit spreads for May expiration.
XLE Daily Chart
While the health care sector (XLV) is incredibly strong, it’s a bit too extended for an entry at the moment. On any dip, we’ll be watching names like PFE closely for a potential entry.
PFE Daily Chart
The consumer staples, and MO in particular, have been good to us over the last few weeks as we closed our fourth profitable trade in the setup this week. Since the structure is still in tact, we’ll be looking to jump back into MO, shooting for winning trade #5.
MO Daily Chart
We hope you’re noticing the theme with these setups.
They are all in uptrends and have positively stacked exponential moving averages (EMAs). Getting long these setups will put the “wind at your back”.
In addition to these setups, here’s more we’re watching closely:
CCJ
MOS
RTX
NTR
As you’re preparing for next week, make sure the setups on your watchlist are supported by trend, structure, and momentum working in your favor.
In Sunday’s video, we’ll cover these setups in detail and a handful of others looking poised to make solid moves.
The market is at the critical levels that we previously laid out for April.
The main focus in play is the daily Ichimoku Cloud as it guides us forward.
The S&P 500 (/ES) approached the Cloud top on Thursday, forming a zone from $4,455 to $4,510. We’ll review this key zone along with other inflection points to create a road map for the coming weeks.
The structure in the market is starting to show lower highs for a slight downtrend. In the video above, we’ll discuss the inflection points going forward along with setups on SHOP, NVDA, and TSLA.
If you’d like an even deeper dive on using the Ichimoku Cloud, check out my 4-hour Options Scalping Secrets course here. I explain my strategy for identifying key levels using my simple indicators to catch big scalping moves daily.
Reading the tape is reading order flow. Prior to candlesticks, charts, and support/resistance levels, traders read the tape to understand transactions.
It’s important to understand this concept as we get an inside look “under the hood” of the stock market to reveal what is actually creating the candles you see on your charts (and what is stopping or helping the candles). Adding this practice to your options trading strategy can seriously help you anticipate where stocks will move next.
There are two parts to tape:
Time and Sales
Level 2
Time and Sales
This shows every order going through at a moment in time. You can see the time, price, and size of the actual transactions.
And equally important is…
Level 2
Level 2 is essentially what you picture as the “floor” in the trading pits of Wall Street. This represents the buyers ready and willing to buy (and the sellers ready and willing to sell) with the price and size they agree on with the trade.
On your trading screen, as shown in the image below, think of it as down below is the auction (Level 2) and up above is the results (Time and Sales).
Reading the Tape Trading Strategy
As stocks approach major key levels, we want to look “under the hood” of the market. We want to pull up the tape and see what’s truly going on.
I don’t recommend watching the tape constantly as there will be millions of orders every day. What you can do is look at the tape as the name you’re watching/trading approaches major key levels.
By reading the tape, we can visualize what the stock has to “deal with” to get through a certain level.
You want to ask yourself, “What sellers/buyers and size of orders does the stock have to get through to get past a certain level?”
On March 23, PANW was approaching a big level and all-time high (ATH) at $600. PANW ran up to this level, kissed it, and all of a sudden the tape showed a large number of sellers who caused PANW to head lower.
When PANW worked its way back up to $600, the tape showed there weren’t many sellers. This led us to think that we should keep holding PANW, since there is a good chance it would break through $600 due to the lack of sellers.
Once PANW breaks through $600, we want to see the buyers come in and hold PANW at $600.
By reading the tape, we were able to anticipate what might happen next. There was a seller with a large order size at $605, which became the new level PANW had to “deal with.”
This is the power behind the tape, showing how you can use it in trading to anticipate which key levels stocks will move toward or away from next.
PANW 10-minute Chart
If you’d like to watch how we traded PANW in the Simpler Trading Options Gold live-trading room, check out the video below for a real-time visualization of how we read the tape to lock in over 100% return on investment.
How to Read the Tape:
On the Time and Sales tab, the size represents the amount of shares.
However, on Level 2 we need to do a bit of basic math. Whatever the size is, you must multiply that by 100 to get the actual number of shares traded.
For example, if on Level 2 a seller offers a size of 2… We would multiply 2 by 100 and know that the seller offered 200 shares.
If the price was at $615, we would multiply 200 shares by $615. This means that a seller is offering $123,000 for their PANW stock. If and when PANW gets to $615 and the seller is still around, there needs to be enough buyers that want to accumulate $123,000 worth of this stock to get through that key level.
That is why tape is so important.
If you’d like an even deeper dive into reading the tape and how to apply it to my go-to strategy for quick profits daily, check out my 4-hour Options Scalping Secrets course here. I explain my strategy for identifying key levels using my simple indicators to catch big scalping moves daily.
As we jump into the week ahead, we want to share our focused list of good looking trends and bullish structure in the market.
Many names aren’t showing clean setups…
To name a few, the S&P 500 (/ES), Nasdaq (/NQ), and Russell (/RTY) aren’t showing clear trend, structure, or momentum. The technology and semiconductor sectors also lack our “big 3” criteria.
Instead we want to shift our focus toward sectors that are in a clean uptrend.
In the video above, we’ll review sectors like energy, agriculture, and healthcare that match our bullish checklist. These sectors have established uptrends, bullish structure, and are backed by momentum.
