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We’re anticipating a large week of earnings for big technology names including Microsoft, Alphabet, and Apple through Thursday. After a flush the last few weeks, the S&P 500 (ES) exploded on Monday toward all-time highs at $4,564, locking in gains for the bulls. 

While the market is technically “extended” this doesn’t mean the market is guaranteed a pullback. As long as earnings reports are strong and the ES maintains highs above $4,551, look for a potential push to the psychological level of $4,600 at 3+ average true range (ATR). This $4,600 level could also be a good spot for a potential pullback. 

If earnings report negatively and the ES trades lower, look for a pullback to $4,526 around Point of Control (POC). 

Follow the market, watch the earnings reactions, and avoid having a strict bias toward one direction or another.

Here is our focused list:

FB — After lower-than-expected earnings were released, the news of the boost in share buyback authorization sent FB higher. FB has been dipping to the weekly and daily Ichimoku Cloud, which could always present a dip buy opportunity. If FB accelerates higher this week and hits $345, look for it to move to the 50-day simple moving average (SMA) at the $350 levels.  

ROKU — While Snapchat earnings sent ROKU lower last week, ROKU created a gap fill between the daily 21 exponential moving average (EMA) at $328 and the 50 SMA at $333. ROKU is printing a 1-hour squeeze and closed at highs on Monday around POC at $324. If it gains momentum, look for ROKU to break through the daily mean and fill the gap to the 50 SMA.

TSLA — TSLA flew higher on Monday, breaking all-time highs past the $1,000 threshold to $1,045. With TSLA extended, it could keep exploding but there is also a big gap to fill on the downside. As long as it holds above $1,000, we’re leaning toward the bullish upside. 

MRNA — MRNA started to explode to our zones on Monday past $344 to $349 and looks like it will keep grinding higher. With upcoming news this week, let’s position ourselves to see if MRNA can push through $350, fill the gap at $359, and move to $377. If MRNA pulls back and holds $345, look for a dip buy.

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The Volatility Index (VIX) is losing support with a Ready Aim Fire!® (RAF) buy signal suggesting a potential bounce. In the past we’ve seen when the Volatility Index bounces, it tends to send the market to the downside. 

With the VIX losing steam, the market may unfold the same way it did last October and roll over to retest the lows.

Will history repeat itself? Maybe, but we need to be ready for the market’s next move.

After seven days of uptrend with low volume, the market is extended and trading at previous all-time highs (ATH). As the S&P 500 (ES) approaches a level of resistance at its ATH of $4,551.50, we’re looking for a dip to the 21 exponential moving average (EMA). 

Rather than focusing on which move is next, look for signals and shifts of momentum that can support your position. Remember the current market conditions we’re in:

• Market is extended
• S&P 500 is at previous all-time highs trading at 2+ average true range (ATR)
• Volume is low on the push higher
• The VIX is at major support trying to print a buy signal 

In today’s video we’ll review last year’s moves in October and determine where to position ourselves, and whether we see a big flush or spike next.

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Traders tend to get complacent in a low volatility environment. The big question is, how low is low?

The Volatility index (VIX) is resting at a major level of support while at the same time printing a Ready, Aim, Fire!® (RAF) buy signal. Is a potential flush in the market around the corner? Maybe, and it could be a potential heads-up.

Sudden, aggressive flushes to the downside in the markets are typically met with or triggered by an explosive move out of the VIX. If you look at recent flushes in the markets in both August and September the VIX was roaring higher.

With this current RAF buy signal setting up we are left wondering if this October will be a repeat of last year — a big flush followed by a spike back to highs followed by another aggressive flush lower. While there’s no guarantee, the signal on the VIX at least suggests this is a good spot to trim profits on longs, especially as the indexes are extended.

A rise in volatility will also favor certain options strategies more than others. For example, long options tend to suffer in low volatility markets and tend to explode in value when the VIX spikes. When you take this all into consideration, long puts on the indexes would offer tremendous potential for big returns if that buy signal in the VIX turns into something more than a signal.

During our Focused Trades Premarket Prep session on Monday morning this is the first place we’ll take a look at as we begin to put together our next round of potential trades. Until then we advise being cautious on the upside here.

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The market broke through the downside trend last week and is approaching all-time highs, just one step closer to the bulls taking back control. With the market moving so much heading toward the end of the week, the question is if the market is exhausted here. 

Remember that many times when the market breaks all-time highs it grinds higher, blasts through recent all-time highs, and continues to run higher for weeks. If the S&P 500 (ES) breaks the $4,549.5 current all-time high, we’ll see if the market can push higher to the psychological level at $4,600. 

On the other hand the market may continue to chop here, so let’s see what happens. 

Be patient and smart with these big moves, but let’s see if the bulls can push this market to new all-time highs.

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The overall market is returning to big levels, shaking off the recent bearish pressure. This week we have earnings reports that could present profitable trades based on the news released. Some big names we’re keeping an eye on are Netflix set to report after the bell on Tuesday, ASML before the open on Wednesday, and TSLA after the close on Wednesday, along with some other names. 

To continue our conversation from last time, the market was and still is at a pivotal level as volatility remains high. The S&P 500 (ES) formed a downside trendline that was met by an upside trendline last week. It finally broke through the 50 simple moving average (SMA) at $4,431 and pushed toward the inflection zone near $4,475. 

This marks step two of the bulls’ run toward all-time highs. If the ES can clear the $4,500 range, look for a push to new all-time highs.

This is also a level where we could see the market fail again, so be wary. 

Here is our focused list:

GOOGL — Continues to be the strongest technology stock. It dipped to the daily Ichimoku Cloud for an awesome dip buy last week and is starting to fire a daily squeeze. Watch the 1-hour squeeze that is beginning to fire to see if GOOGL can carry its momentum for technology higher. If GOOGL can hold $2,846, look for a push to $2,870 toward $2,900. 

ROKU — Exploded on Monday and broke through the downside trending wedge. Closed above the 50 SMA at $337 on Monday and is starting to fire a daily squeeze. If ROKU can clear $347, look to take it up by increments of 10 toward $350, $360, and $370. 

SQ — Had both a downside and upside gap to fill. On Monday SQ filled the downside gap and kissed the upside gap with the 2-hour squeeze stuck at the gap fill level. Focus on $251.34 and $250.70 to see if SQ can hold and fill that gap, pushing SQ back to its 50 SMA at $256 with a potential move to $260. 

AFRM — Honey badger. Opened at lows on Monday and exploded to settle at a new all-time high of $160. Ideally look for AFRM to retest the prior all-time high at $153 for a dip buy up to $170. 

Looking forward to seeing those of you signed up for the Power in Maximizing Short-Term Moves webinar on Wednesday, October 20th at 7:00pm CT.

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We’re sitting in a vulnerable market where patience is necessary amid the choppy back-and-forth action. The flush has shown that the path of least resistance could be to the downside but support from the 21 exponential moving average (EMA) could make the downside path troublesome.

As we’re approaching resistance at the +1 average true range (ATR) the question is if the selling pressure is over. Are we heading toward all-time highs or is the market oversold heading into monthly expirations, grinding the market to the downside?

With the daily squeeze forming on the S&P 500 (ES) the market could see a dip for the next flush or stabilize and move higher. In today’s video we’ll discuss where to short the market and where we’ve positioned ourselves with credit spreads in the Compounding Growth Mastery.

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“We overestimate what we can accomplish in a year, and underestimate what we can accomplish in 10 years.”

I’ve heard this quote thrown around over the years, and there’s a lot to take from this for us traders. It is only human nature to seek instant gratification and often we put huge expectations on ourselves in the short term. We want to make big money and we want to make it right away. The reality is, reaching a point of consistency in your trading is a result of focusing on the right things year after year. 

Successful traders put their natural desires for instant gratification aside and instead focus on the big picture. Trading is a game that can lead to long-term wealth. Trading can also lead to financial ruin in the short term if you approach the game with the wrong mentality. What some traders fail to realize is the market experiences volatile ups and downs. As a result of trying to rush the process, traders rob themselves of the steady, forward progress they could have otherwise achieved with a different mindset. 

Trading is a tough game, but imagine how much harder it becomes when placing huge expectations on yourself in the short term. Just as important, imagine how much easier the game could be for you if your goal was instead to make a lot of money over the course of many years. With the second mindset, you’re focusing strictly on the big picture and solely on the things that can move you closer toward your goals over time. 

Over the years, I have learned that my job is to simply trade one clean setup after another. To put it simply, that is it and nothing else matters. I don’t come to the market thinking about what I can accomplish this week. Instead, I simply focus on waiting for the next high-probability opportunity. I eliminate short-term expectations, deadlines, and any other stipulations. I know that if I simply do my job and trade nothing but the best setups the market has to offer over and over again, the numbers will work in my favor over time. This process slowly moves me toward the financial independence so many of us are after. 

If you find yourself stressed over what you feel is a lack of accomplishment in the short-term, I suggest you stop focusing so much on the next one to two weeks and instead focus on being a good trader for the next five to 10 years. You will likely find yourself feeling much more “free” as a trader when you stop trying to accomplish all of your life’s goals ASAP!

It’s the classic tale of the tortoise versus the hare, and in trading tortoises end up wealthy and hares continuously “spin their wheels.”

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This vulnerable market is starting to move to the upside, slowly unfolding our bullish thesis on direction. Earlier in the week we discussed the critical levels that led the market to trend lower where we were able to go short and take advantage of the pops to the downside trendline.

Over the last few days the bulls started pushing the market higher and today we broke through a large inflection point at $4,392 toward the 50 simple moving average (SMA) near $4,434 on the S&P 500 (ES). This is the first step at returning to a bullish market. 

If we hold the 50 SMA, that will be the next step toward the “right” (bullish) direction… but remember to stay patient because there is always the possibility of a fast break lower.

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The market is currently vulnerable with high volatility and big levels. Conditions recently switched from the bullish trend we’ve seen all year to a downtrend below the daily Ichimoku Cloud for the first time this year.

Rather than buying the dip, we’re seeing a steady pattern of a “short the pops” market.

We have a few events on the economic calendar this week, the biggest being the FOMC meeting minutes on Wednesday, October 13, at 2 p.m. Eastern. Retail sales are released at 8:30 a.m. Eastern on Friday, October 15. With the recent focus on inflation, it’s important to note how these events can affect the market.

Here is our focused list:

GOOGL — One of the strongest tech stocks this year. If the market drops, expect GOOGL to drop to point of control at $2,731. Looking for a gap fill from $2,755 to $2,771. If GOOGL fills the gap, we’ll look to buy the dip at the gap at $2,755. 

ROKU — Currently in a 2-hour squeeze. Point of control moved from $305 to $325. If ROKU drops below $319, look for ROKU to fall to $314 and potentially to $305. If it holds $319, look for ROKU to break from $330 up to $340. 

MRNA — After a strong uptrend, MRNA dropped below the daily Ichimoku Cloud and is setting up a squeeze. Point of control dropped from $325 to $310. If MRNA moves to the upside, look for a move toward $330 to $340. If it trades below $310 and approaches $293, we could see MRNA drop to $283 and potentially $271. 

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As a trader it’s important to know how to read trade alerts so you can quickly take action in this fast-paced market. For those of you in the Simpler Trading live-trading rooms, you’ve seen our traders send out trade alerts in the thinkorswim® (TOS) format. 

Watch the video above so you can quickly decipher trade details from where to enter and exit a trade based on the type of spread traded. 

Stay Focused!