Happy Sunday, Traders!
I’m thrilled to present several fresh concepts, strategies, and ideas today. These ideas hold substantial potential for significant directional moves this week. Rest assured, as always, I’ll provide my precise and actionable trade plans, outlining my entry and exit strategies.
Before I share my fresh ideas, I want to offer a brief insight into how I manage risk to avoid taking a massive outlier, potential career-ending loss.
Based on their historical success and data, I have a risk table that systematically tells me what percent of my daily loss limit I should risk on particular setups. Built into that is a rule that I strictly enforce that pertains to my A-graded setups: I will only lose up to three days’ worth of an average green day in a particular idea/trade.
I factor that amount into my risk table, and of course, it fluctuates depending on the market environment that we are in. It keeps me safe, knowing that it’s never a blow-up if I trade poorly or if the trade simply does not work. At most, it is just a few average green days’ worth.
Now, onto the new ideas for the week and kicking it off with another breakout idea, as those have been performing well in the current market environment.
Breakout Setting Up in Tesla
Typically, when an idea seems as crowded as the breakout in Tesla, I will avoid it. However, given how the stock shrugged off a short report on Friday and has firmly held up in the higher end of its range following the Cybertruck event, I am interested in it.
I love how the stock has had several opportunities to sell off in the past few weeks but has failed to do so and is now consolidating above increasingly tightening key moving averages.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
I’m keeping it simple: I want to get long above the hourly consolidation, around $247.50, as long as the price holds above this zone with authority. I’m looking for momentum higher; therefore, my stop will be $245 on my initial entry, as I don’t want the stock trading back in the range.
If the stock breaks above $250 and holds, I will double my position. My first target is $260 for this position, and as the trade works over $250, I will trail my stop using higher lows on the hourly timeframe. Once the stock breaks out successfully, I will have a 2 – 3 day expected hold timeframe.
Affirm Mean Reversion Short Swing
What was previously a long idea, arguably one of my best recently is now on my watchlist for a potential short. Since breaking out from $26, shares of AFRM have surged by about 63%. It’s important to remember that the stock has a 20.3% short interest.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
Simply put, I am looking for a 2-day pullback short swing. But to enter short, I need to see the stock exhaust. So, I am looking for a sign to enter short and a level to risk against.
For example, I am looking for the stock to experience a range expansion to the upside, intraday, and then have an engulfing red candle, indicating that a top has formed in the short term. Alternatively, I am looking for it to break a multi-day consolidation lower or break the uptrend by putting in a lower high and lower low.
Once that occurs, I will look to get short versus the high of the day and trail my position using the hourly timeframe and lower highs. Currently, I have three profit targets: $38, $36, and a third left on with a trailing stop for $34 or stop out.
Backside Short in Last Week’s Movers
Similar to my plan for several small-cap, low-priced stocks last week, I will have alerts set for several names that ran last week and failed convincingly.
Five stocks I have alerts set for, looking to short a failed pop into key levels: INTS, SVFD, MLGO, GDHG, and WBUY.
Here’s my plan for the first-mentioned stock, INTS, which shares the same thought process as the others.
*Please note that the prices and other statistics on this page are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity, slippage and commissions.
INTS has significant overhead to get through after steadily failing and trading lower from the open on Friday. As a result, I am looking to short a pop back into breakdown levels and areas where supply might easily overwhelm demand and lead to a failed pop.
For example, I will get short the stock if it pops in the $9 – $9.50 area and fails to hold. I would reactively get short based on the price action, with a stop above the move’s high once it has been confirmed. Then, I will look for an intraday swing short continuation, trailing my stop once as the position works by using the previous lower high on the hourly, as I would not want the stock to reclaim and break its intraday trend. My target would be a move back near Friday’s low.
The post The Weekly Trade Plan: Top Stock Ideas & In-Depth Execution Strategy – Week of December 11, 2023 appeared first on SMB Training Blog.
