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As of today’s close, many of the bearish weekly squeezes we discussed last week have officially fired short. This adds to the list of reasons we’re looking for a continuation lower.

Remember, the rule-of-thumb with a squeeze is once it fires, we’ll typically see 5 to 8+ weeks of momentum. Given these are weekly squeezes, there’s the potential for 5 to 8+ weeks of momentum to the downside. That’s momentum we want to ride.

Two examples of big (and important) weekly squeezes firing short are SPX and AAPL, as shown above. We’d like to short both of these names on the next bounce. There are similar setups all over the place, but these are the two we’ve decided to focus on.

Keep in mind that it isn’t just the weekly charts setting up for further downside potential. 

As of this week, we’re also starting to see monthly charts lose structure with moves well under the monthly 21 exponential moving average (EMA). This alone is a huge shift of trend and structure, all in favor of the bears.

As for how we’ll look to short any bounce, July expiration put debit spreads and call credit spreads will be our strategy of choice. As always, we’ll aim to work our desired risk: reward.

Stay tuned for the Sunday video, as we’ll price out a few trades together that we’re looking at.

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It’s been a volatile and exciting trading week due to options expiration (OPEX). 

This week’s price action captures what we can expect during OPEX and volatile times. The market has seen chops, pops, and a big drop.

After the S&P 500 (/ES) dropped near $3,855 on Wednesday, the question now is if we see another significant move on Friday.

For the market to pop, the /ES has to break through the $3,900 and $3,928 range. Then we could see a push to the $3,980 to $4,000 zone.

If the /ES rejects the zone from $3,900 to $3,928, we’ll look for the market to retest the low from last week at $3,855. Below this level, the market could fall to $3,843.

Remember the importance of liquidity and major zones. Trading zone to zone can be especially useful during a volatile OPEX week.

In the video above, we’ll review the price action and zones of the major indexes and the SHOP setup we’re keeping an eye on.

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This week we are anticipating options expiration (OPEX) on Friday, May 20. 

Big money likes to take advantage of options expiration to cause chop and keep price near liquidity. This week, keep this in mind to either stay out of trouble or take advantage of this event.

It’s important to be aware of OPEX as it ties in with trading around liquidity. 

The point of control (POC) for the S&P 500 (/ES) dropped to $4,013.50. On Monday, /ES spent most of the day trading around this POC level.

On Tuesday, we have two catalysts that could impact the market. First, we’ll have a member from the Federal Reserve speak at 8:00 a.m. Eastern. At 8:30 a.m. Eastern, retail sales from April will be reported.

In the video above, we’ll lay out potential scenarios we could see this week with OPEX and lay out our next liquidity targets and key zones.

Here is our focused list:

SHOP — If SHOP pops and fails at $383, we’ll target $355 to POC at $340. If it pops and breaks through $383, we could see SHOP hit POC at $401 and reach the $430 to $440 range.

ROKU — As long as ROKU is below the $103 to $98 zone, look for a drop to $88.50 and $83. If ROKU holds $92, it could pop to the mean at $98.

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Will the market get a continuation of Friday’s strength?

This move would be ideal for us to short the bounce as we want to enter our short positions at the 21 exponential moving average (EMA). 

The S&P 500 (SPX) has a weekly squeeze that hasn’t fired short. This weekly squeeze has the potential for 5 to 8+ weeks of downside momentum.

In the Sunday watchlist video above, we’ll lay out where we’ll look to short the move on SPX and review names with similar squeezes on TSLA, AAPL, AMZN, and GOOGL.

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After relentless selling all week, the markets finally rallied on Friday, setting the stage for a short squeeze next week.

The indices and many leading names reached deeply oversold levels on Thursday. While that is the moment in time when things feel as bearish as possible, it’s typically not the best time to get short. Getting short “in the hole” puts a trader in the position to fall victim to the oversold bounce, just like we saw on Friday.

The ideal time to short is on the bounces into falling 21 exponential moving averages (EMA). Should Friday’s strength continue into next week, that’s exactly what we’ll be looking to do. While there are a lot of bearish setups on our watchlist, we’ll likely focus on the S&P 500 (SPX) for our next bearish positions.

Looking at the weekly chart of the SPX above, notice that it is setting up in a bearish squeeze under the 21 EMA. Remember the rule of thumb with squeezes: once a squeeze fires, the move tends to last for 5 to 8+ bars. 

Given that this is a weekly squeeze, there’s the potential for 5 to 8+ weeks of momentum to the downside. We aren’t just seeing this setup in the SPX. TSLA, AAPL, AMZN, and GOOGL all have similar squeezes.

Because of these weekly structures, we want to short the next bounce toward the daily 21 EMA. Shorting into the strength will offer the best risk-reward on debit spreads or credit spreads. This will allow us to catch the “meat of the move”.

Keep a close eye on things next week, and be ready to consider getting short positions working should the SPX rally into the $4,150 to $4,200 range.

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The S&P 500 (/ES) continued to drop lower on Thursday. The /ES opened below the weekly Ichimoku Cloud for the first time since COVID in 2020.

Although the market is extended to the downside, this doesn’t mean price will head toward liquidity. Instead, we want to focus on the next pop setting up for a better short opportunity. 

Pay close attention to the $3,900 range. If the /ES breaks through this range to $4,000, we could see it head toward $4,029 and $4,055. If the /ES fails at $3900, it could roll over to $3,840 and $3,800 next.

In the video above, we’ll lay out key zones on the major indices, the volatility index (VIX), and names on our watchlist like SHOP, GOOGL, and AAPL. We’ll use these inflection points as our compass heading into Friday. 

We’ll see you tomorrow morning for live premarket prep on the Focused Trades Youtube before we look to take action in the Simpler Day Trading room together.

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Last week was full of earnings reports, economic events, and statements by the Federal Reserve. 

This week, the main economic event we’re focusing on is the Consumer Price Index (CPI) report released on Wednesday morning. This report will tell us if consumers are paying more or less for goods and services. This ultimately gives us a gauge of inflation.

We’ll tie the CPI report into our thesis for the week and lay out the different scenarios we could see if this catalyst gives the market a relief pop or drops it lower.

On Monday, the S&P 500 (/ES) dropped to the major key zone from $4,055 to $4,029 we’ve been discussing. We took advantage of this move in the Simpler Day Trading Room with SPX puts, locking in profits to start the week.

In the video above, we’ll lay out major liquidity levels and scenarios we could see if SPX reverses structure heading into the CPI report.

Here is our focused list:

SHOP — If SHOP breaches $334, look for it to break down to the major zone from $305 to $282. If it starts to pop through $355, look for SHOP to work its way through $383 to point of control (POC) at $401.50.

ROKU — See if ROKU can first pop to $92 for short opportunities. From there, look at the $97 to $103 zone to short again. Our targets to the downside are $83, $80, and the earnings low at $75.

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After the Federal Reserve statement on Wednesday, the S&P 500 (SPX) short squeezed up to its 21 exponential moving average (EMA). On Thursday, the market flushed and wiped out the entire move. In hindsight, this would have been a spot we’d like to short the SPX and names like AAPL and TSLA.

We’ll wait for the next potential bounce to enter our short positions. Ideally, we want to enter these positions as close to the 21 EMA as possible.

In this video, we’ll review key things to keep in mind heading into next week and names on both our bearish and bullish watchlists that we’ll look to short on a pop or buy on a dip.

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The big question heading into next week is whether or not we get a shortable bounce. The weekly and 3-day squeezes in the S&P 500 (SPX) continue to look poised for more downside, as they haven’t even fired short yet.

In terms of shorting the bounce, in hindsight, it would have been great to short the post-Fed pop on Wednesday. 

After Federal Reserve Chairman Jerome Powell wrapped up his speech, we saw the SPX, QQQ, and names like TSLA rally into their falling 21 exponential moving averages (EMA). We didn’t take any action into that pop (aside from taking profits on long positions), so we are patiently waiting for the next bounce before initiating our shorts.

Remember that heading into next week, we have the indices trading below -2 average true ranges (ATR) on the daily charts with a put/call ratio above 1. Often when the market finds itself in this position, there is a potential for a short squeeze around the corner.

As bearish as things look, we suggest being careful playing the short side until we see a brief relief rally. If we do, we’ll be ready to open shorts on the SPX as close to the 21 EMA as possible.

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Our final catalyst for the week is the Nonfarm Payroll (NFP) job report on Friday morning before the market opens. This economic event is our chance to see what big money wants to do for the rest of the week, whether sending this market even lower or giving a relief pop.

We are in a bearish market, so we will continue to focus on shorting the pops. 

After the FOMC event on Wednesday, the S&P 500 (/ES) had a large cover pop to $4,300. On Thursday, the /ES broke through point of control (POC) and started to head toward the previous low of the year at $4,101.

In the video above, we’ll lay out key levels on /ES where we’ll look to enter our short positions. We’ll discuss the rest of the major indexes, volatility, and our SHOP setup after a disappointing earnings report dropped it lower than the expected move.

Stay Focused!