While this week was nothing but a boring chop-fest, the structure of the market still looks promising for a push into new highs over the next couple of weeks. The daily squeeze in the SPY (shown below) looks like it’s close to firing to the upside. And the QQQ (chart below) has finally recovered a bullish structure to its daily chart with a squeeze of its own and positively stacked exponential moving averages (EMAs).
Right now it feels as if everything is squeezing: SPY, QQQ, the Dow, and IWM have daily squeezes, and if that isn’t enough, almost every major sector ETF is setting up in daily squeezes as well (IYR, XLE, XLF, XLI, IYT, XLK). What this tells us is that across the board the markets are building up tremendous energy inside these squeezes and sooner or later that energy is likely to be released in the form of a run higher.
These are the moments in time when we need to get positioned in the cleanest setups the market has to offer and hang on tight (as long as they hold structure) in anticipation of a big move to the upside, fueled by the overall market’s squeeze.
We’re locked and loaded with put credit spreads in GOOGL and CAT (charts below), both of which performed well this week. GOOGL is looking like it could be our next $20K trade, although adding to the position at this point would be less than ideal. We’ll be holding onto these positions until we get our moves to new all-time highs or until we collect 75% of max profit on the spreads (whichever comes first). MMM, AMZN, and MSFT are also of interest right now and we’ll cover those in detail in this Sunday’s premium video.
Though our major focus is on the directional-opportunity that we believe is just around the corner, we never hesitate to collect some easy premium if the market is doing nothing but chopping itself silly. This week we sold iron condors on SPX and NDX, selling calls and puts slightly further out-of-the-money than this week’s expected move. We were able to collect 80% of the max profit on each of these condors, good for a little more than $2,000 of “low-stress weekly income.”
This makes two consecutive weeks that we’ve collected some nice profits by selling condors, but we certainly are looking forward to the potential of these squeezes firing!
Enjoy your weekend, rest up, and we’ll talk to you this Sunday in the premium Watch List videos.
Stay Focused!