As we start to build our watchlist for the week, we need to be aware that there are times in the market to be more active and times to simply ‘sit on your hands’. There are multiple names presenting good-looking setups but they all have one thing in common…
Volatility continues to grind higher.
In the Nasdaq (QQQ) for example, we have a brand new daily squeeze, with names in the technology sector like GOOGL and MSFT also presenting daily squeezes. While these setups are showing structure and trend, we’re waiting patiently to buy the dip.
Because volatility is high, the market does not have a strong conviction to the upside. For the last few months, we’ve seen the market flush and turn back around to all-time highs. Every time the market turned to the upside, volatility flushed.
For that reason, we will ‘sit on our hands’ and wait for volatility to drop until we look to buy the dip and enter high-probability setups. Look for structure and trend for valid setups and wait for the volatility index to die down before confirming and entering your long position.
Stay Focused!