In this special, early edition of Focused Trades, we’ll walk through my morning prep and discuss what zones we’re watching in this vulnerable market. The overall market is breaking down and firing squeezes, which is when we like to move our attention toward playing the markets.
Since the S&P 500 (ES) hit the high at $4,740.50, the market has become vulnerable, trading at tricky levels. The market is in bearish territory as every pop in the ES hit the 21 exponential moving average (EMA) and rejected it. As of Wednesday, the ES is officially below the 50 simple moving average (SMA).
Another big focal point is the daily squeeze in the market as momentum is setting up. Our biggest key level in the ES is $4,549. If the ES can head toward that zone we can see great short opportunities.
Watch the video above for key zones we’re watching and a breakdown of the three major indices.
The market ended last Friday with high volatility despite the holiday weekend. The S&P 500 (ES) dropped from its high at $4,740.50 to the low of the day due to the new COVID-19 variant that temporarily spooked the market.
We don’t expect the day-to-day shocks to end anytime soon as the market will continue to react to certain COVID-19 news. If the market gets conditioned to the news, we might not see as much action as we did on Friday but won’t be surprised by future reactions.
If negative news is released, we could very likely see fear trickle into the market. We’ll keep reacting to the looming catalyst day-by-day.
One thing we can do is rely on the technicals. On Monday the ES had a relatively green day, engulfing almost half of Friday’s drop. We are still in a volatile market, so it’s important we have compasses that we can follow including the 50 simple moving average (SMA), daily mean, and daily squeeze.
Here is our focused list:
GOOGL — Kissed the trendline and 50 simple moving average (SMA) on Friday for the third time since October. Be patient, and if GOOGL can’t break through the daily mean at $2,850 it could drop below the trendline to $2,800. GOOGL currently sits in a daily squeeze and if it can break through the daily mean, the squeeze could fire to the upside through point of control (POC) at $2,909 to the $2,980 range.
MRNA — Gapped above and held the daily Ichimoku Cloud on Monday. MRNA is approaching the flat top line of resistance on the Ichimoku Cloud at $375. If it rips through the daily Ichimoku Cloud at $380, MRNA could reach $400. It could also get rejected and pull back for a quick short opportunity to POC at $343 or the 50 SMA at $322.
NVDA — Sitting at the highs in a 4-hour squeeze. While NVDA is extended, if it can squeeze and break through its all-time high (ATH) at $346 we could see it rally higher. We could see a dip buy opportunity if NVDA drops to $330 or to POC at $323.
SHOP — Currently trading at the daily mean. As long as it holds $1,540 there is a potential dip buy opportunity to $1,600 and $1,660 this week, and potentially farther through $1,700. Look to buy SHOP low and sell it high.
The market saw no dull moments during this shorter week as we rolled into the end of the month. The market experienced selling pressure on Friday due to the new coronavirus variant, but we’re maintaining our focus on the charts.
The Nasdaq (NQ) was down 2% on Friday, but the weekly structure held strong, accompanied by a new daily squeeze. If the NQ can find support, this daily squeeze could fire the NQ to the upside, even if it retreats to the 21 exponential moving average (EMA).
The S&P 500 dropped about 2.5% on Friday with potential for a buying opportunity if it falls to the 21 EMA around $4,500.
The Volatility index (VIX) boosted almost 50% on Friday, and if it continues higher we can expect more selling pressure. We likely won’t see a Santa rally unless the VIX moves lower.
Focus on structure, run your scans, and build a watchlist based off setups with the better trends. Our plan is to remain patient with our trade ideas and execute once the VIX dies down.
Watch the video above for our plan moving forward on setups like AMZN, AAPL, and GOOGL.
During this short holiday week we saw the indexes revert back to their daily 21 exponential moving averages (EMA) for the first time since early October. As goes the market goes the stocks, so we saw some selling pressure in FANG stocks this week as well. However we believe there’s a lot to love about this dip…
In terms of structure nothing has changed about the indexes, AMZN, AAPL, TSLA, and other names we’ve been focusing on. AAPL continues to hold up well, while AMZN, TSLA, and GOOGL have all reverted to their mean. We think this opens the door for some nice entries in long positions.
ES Daily Chart
NQ Daily Chart
So long as this dip in the market doesn’t begin to break structure of major timeframes, we continue to think the weekly squeezes in the QQQ, AMZN, AAPL, and GOOGL are poised to fire long into the end of the year.
AMZN Weekly Chart
AAPL Weekly Chart
One chart to keep a close eye on here is the volatility index, the VIX. Per usual, VIX is spiking as the indexes are reverting back to the mean. Before we can have confidence that the market is ready to find support and turn back toward the highs, we’ll need to see VIX die down and start fading back towards its own 21 EMA.
In Sunday’s watchlist video we’ll dive in and take a look at this week’s action, along with the top setups on our watchlist and an updated look at our current positions.
The market showed volatility on Monday at the start of the shortened holiday week. The market will be closed on Thursday for the Thanksgiving holiday and will open for a half day and close at 12:00 pm Central on Friday.
The holiday week could bring more volatility with big money causing increased price action. On the other hand, the market could see an “early holiday”, where we can expect chop to finish the week.
Keep in mind that premiums could get aggressive. Size down, have fun, and understand the type of conditions we are dealing with.
The market had a decent selling day on Monday, as the S&P 500 (ES) lingered near its high at $4,740.50. After last week’s options expiration, volume picked up and started a textbook reversal.
We’re working with a lot of the same key levels as last week now that the ES dumped to our key zone through point of control (POC) at $4,695 to the lower POC at $4,673 on Monday.
While we’re mostly focused on trading the overall market this week, let’s review some key setups that could lead to strong opportunities.
Here is our focused list:
GOOGL — The trendline aligned with the daily mean at $2,928 on Monday. If the market does move higher, we could see a dip buy opportunity at the mean. If GOOGL breaks its trendline, it could drop to POC at $2,909 to $2,891. If it starts to grind higher, we could see a move to POC at $2,969 and potentially to $3,000. Be patient and see if technology continues its weakness.
NVDA — Pay close attention to NVDA because it has been a strong name this year. It had another gap on Monday that could lead to a potential dip buy opportunity. If the market becomes more bearish, we could see a move to the range from $313 to $305. With POC at $304, this further confirms a gap fill. If it goes further, NVDA could revert to the mean at $287.
We want to be prepared in case there is action to take next week, while keeping in mind it is a shorter week due to the Thanksgiving holiday. We’re still focusing on the same major spots we’ve been discussing, specifically on technology. In this video, we’ll take a deeper dive into actionable setups we’re watching, like AMZN with its multiple squeezes on the monthly, weekly, 3-day, and daily charts.
Watch the video above to see where we’re planning to build positions on tickers like GOOGL, APPL, and NFLX. We hope you have a great holiday weekend, and we’ll see you on Monday.
Our focus over the last few weeks has been the multiple squeezes setting up in names like AMZN and AAPL, both of which have squeezes on the weekly, 3-day, and daily time frames. So far our focus is paying off as both stocks pushed aggressively to the upside this week, both officially firing their daily squeezes.
When there are squeezes setting up on multiple time frames, our goal is to get positioned as close as possible to the buy zone, the 21 exponential moving average (EMA). This allows us to sit back and watch as the squeezes fire, one by one, as opposed to having to chase the stock once the move begins.
With weekly squeezes setting up on each, our targets for AMZN and AAPL are the +3 average true range (ATR) extensions on the weekly chart. For AMZN, this lines up around $3,900, while +3 ATR on the weekly chart for AAPL is closer to $165. Our put credit spreads on each have collected more than half of the max potential profit, and we are looking for continuation to the upside next week. In the event the moves continue quickly we should be in great shape to get filled on our exits for 85% to 90% of the max profit.
AMZN Weekly Chart
AAPL Weekly Chart
In the spirit of getting long, strong trends at the buy zone, we also entered a December monthly expiration put credit spread in TSLA, which recently pulled back to its daily 21 EMA. On this setup we are looking for continuation of this crazy trend with a move back to the previous highs. The put credit spread that we sold offered a 2:1 risk-reward ratio. We can comfortably hold this all the way down to the daily 50 SMA if needed.
TSLA Daily Chart
Find a trend, find some squeezes, and work your entries wisely. That’s the simple game plan that has served us well all year and we expect it to continue serving us well into the end of the year.
In the Sunday video we’ll take a look at our open positions in NFLX, AMZN, AAPL, and TSLA, along with a few other spots that are looking poised for higher prices. We hope that many of you have taken action on the ideas mentioned here over the last few weeks, and we’ll talk to you on Sunday in the weekend watchlist video!
It’s been a big week for the market as we approach options expiration on Friday, which typically brings more chop and larger drops/pops.
The S&P 500 (ES) is starting to form a 2-hour squeeze heading into Friday. If the ES can rip through $4,711 we will likely see the squeezes fire and the ES move higher. On the other hand, we could see ES pull back to point of control (POC) at $4,673.
Our focus is on technology as it was the strongest index on Thursday with the Nasdaq (NQ) reaching an all-time high (ATH) at $16,490. Keep this ATH marked as a key level on your charts along with POC at $16,340, as these are the levels we’ll be watching for the NQ move.
Watch the video above to view setups that are exploding like GOOGL, SHOP, and AAPL. To view and download the Trading Calendar 2021 referenced in the video, visit the link here at Nasdaq Trader.
This week we’re anticipating earnings that can introduce new market opportunities, specifically for NVDA on Wednesday night. The market is still trading in exhausted levels with a gap up on Monday and a close at point of control (POC) at $4,673.
If the S&P 500 (ES) can stay above this level we’ll expect bullish moves, potentially to new all-time high (ATH) levels. Be patient near the POC and look for an hourly or 2-hour squeeze to form.
If price dips below the current POC, see if ES can return to our previous POC at $4,619.
Here is our focused list:
GOOGL — POC increased from $2,909 to $2,969 after the run higher Friday and gapped up on Monday. Watch for the hourly squeeze to form as GOOGL is setting up for a large move. If GOOGL holds $2,944, we could see bullish acceleration to $2,973 and a boost higher to $3,012.
NVDA — Ran to highs on Monday ahead of anticipated earnings Wednesday night. NVDA is in a 2-hour squeeze and 4-hour squeeze so it is positioned to remain strong, but make sure to watch for the earnings report as a potential catalyst. As long as NVDA holds the zone at $286, we can expect a push to $314 up to ATH. To the downside, we could see NVDA drop to $270. Let’s get through earnings first.
SHOP — Big move on earnings as it ran to an ATH at $1,704 on Monday with a weekly squeeze trying to fire. See if the squeeze can fire and SHOP can hold above the key zone from $1,632 to the previous ATH at $1,650. Focus on the hourly squeeze for intraday setups and for SHOP to continue its move higher.
TSLA — Is Elon done selling? TSLA dropped to $987 on Monday after Elon Musk tweeted that he would be selling some of his shares. If TSLA can break the trendline forming and push past $1,001 to $1,036, look for it to move to $1,071. If it keeps selling off we can see TSLA drop to $944 and potentially fill the gap to $910. Point of control is still at $1,175, so we could see TSLA work its way higher.
BA — Broke the downtrend on Monday after strong news reports and hit an ATH at $233. Would love to see a push toward $240 this week as it is starting to fire a daily squeeze.
Find an uptrend, find a squeeze, find a setup, take a position, and let it fly. That’s our mindset for the week.
In our opinion, we think this uptrend will continue into December and January. That isn’t to say we won’t expect any pullbacks as we saw in last week’s small dip. We could easily see the S&P 500 (ES) pullback and test the 21 exponential moving average (EMA).
With the market extended, if we do pull back a bit we want to set up our trades to be able to sit through those pullbacks. We’ll review key setups we’re keeping an eye on this week, including our NFLX put credit spread in the Compounding Growth Mastery.
