With the pullback in the market last week, this is a good time to identify which stocks held their bullish structure during the volatility, as these are likely the first stocks to resume their bullish trend once the market puts in a bottom.
Two names I’m watching closely right now are $GOOGL and $NVDA. While the markets slid last week, these two setups held their bullish structures. Once the markets find a bottom, should the bullish trend continue into March/April, I believe $GOOGL and $NVDA could thrive.
With that said, I’m looking for good entries in April expiration and put credit spreads on each of these setups. Let’s start with the game plan for $GOOGL.
*REMEMBER THE 3 P’S
– PROBABILITIES
– PEACE OF MIND
– PROFITS
- $GOOGL
The Structure
- Bullish weekly trend with stack EMAs + Green 10X bars
- 3 day chart with bullish trend, a positive histogram, stacked EMAs + Green 10X bars.
- Daily Chart has stacked EMAs, Green 10X bars, with the 21EMA holding as support while tech sold off
- Multiple lower timeframe squeezes on top the 21EMA (launching pad)
Probabilities and Peace of Mind
-Unlike $AMZN, $FB, $AAPL, and $MSFT, $GOOGL has shown signs of relative strength as of late, and is the only tech name to currently have a bullish structure across-the-board. Because of this bullish structure, should the markets be trading at new highs come March-April, $GOOGL should be carrying the baton and leading the way for tech.
– By focusing on this kind of bullish structure, we’re putting the probabilities in our favor of catching a directional move. With stacked EMA’s and green 10x bars on the weekly, 3D, and daily, this is just about as good as it gets.
-By selling a put credit spread for April expiration, we’re putting the probabilities in our favor by giving the trade plenty of time, and by not necessarily requiring a big directional move to profit.
-Selling a spread with plenty of time until expiration also allows us to enter this trade with peace of mind. We don’t need the move to unfold in our favor immediately, and really all we ultimately need is for $GOOGL to hold above our short-strike.
The Trade
Should the indexes show signs of a bottom, and if $GOOGL maintains its bullish structure, I’ll be looking to sell an OTM put credit spread for the April monthly expiration, aiming for at least a 3:1 risk to reward ratio with a short-strike under $2000.
*example: sell April 16 -2000/+1950 put credit spread @ $1.50
Remember, as goes the market, goes the stocks. Meaning, if the indexes do rally to new highs into April, this should be a great swing on $GOOGL. Or, should the markets fail to find a bottom, $GOOGL is more likely to begin losing its bullish structure. We shall see how things unfold from here, but this is the kind of setup I want positions in should the overall bullish trend of the markets continue.