Happy Sunday, Traders!
I hope you all had a relaxing weekend and are feeling prepared for the upcoming week, which should be eventful.
But before we discuss upcoming ideas and catalysts, let’s first review the action and thoughts from last week.
Not many saw or correctly predicted the market experiencing such steady buying last week, with the tech sector firmly leading. The overall market, SPY, closed the week up almost 1.5%, and the QQQs led the way, breaking out of its channel and closing the week up nearly 3%.
One of my ideas from last week was a pullback in the QQQs, as I believed the market was stretched to the upside in the short term. Of course, that did not materialize, and there was no confirmation. Therefore, no swing trade was initiated. Even though that’s a trade idea that did not come to fruition, there is a valuable lesson and key takeaway there:
The power of IF~THEN statements. Notice from my plan last week for the QQQs that I laid out multiple scenarios that would invalidate the trade idea. For example: “If it breaks above $370 and holds or above the previous lower high of $373.73, there is no trade, and the idea is not valid.”
As important as knowing what confirmation you seek to enter a trade or add to it, it’s equally important to know the specific price action and developments that would result in a trade being invalidated or a reason to exit. Being armed with these IF~THEN statements prevented me from entering a losing trade without receiving the required confirmation.
Lastly, before I review an idea from last week and then introduce fresh ideas, a reminder that on Tuesday, November 14, the CPI data will be released at 8.30 A.M. Eastern Time. That, of course, can dictate the market trend for the remainder of the week should the results surprise.
A Snapshot Review of IBRX Short Idea
This played out well, as planned in the watchlist last week. The stock broke the uptrend on Monday and failed to reclaim it, indicating a shift in momentum. Notably, it also failed to reclaim and hold above the $3.5 level I was watching.
*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.
As a result, there was confirmation, and the plan had materialized and called for action. There were multiple lower high pops on the hourly chart to enter short versus the day’s high on Monday, around $3.80. Three days later, the momentum shift played out as the stock traded into the target area around $3.
Admittedly, I am light on swing ideas and lack conviction this week because of where many stocks are now concerning their moving averages and 52-week range. I will mostly be reactive after the CPI data on Tuesday and look to be move2move in this tape. I hope some stocks can stabilize and correct over time, setting up better swing opportunities in the coming weeks.
One straightforward, reactive swing ideas I have, however, is the following:
Continuation in DKNG
After breaking out of a significant consolidation on its daily, shares of DKNG experienced significant sustained momentum higher. On Friday, the stock had an inside day, setting up a potential opportunity for a second leg higher.
*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.
The plan here is relatively straightforward and highly reactive. However, as it’s already quite stretched in the short term, with a significant upcoming catalyst for the markets, I’m not overly excited about it. It’s a pure technical analysis play.
If the stock breaks above $ 35.50 and holds, confirming a higher low, I will look to get long with a stop at $35. I will be in half of my desired size. From there, if the stock pushes over $36 without stuffing, I will double my position and maintain my hard stop near $35. My first target is a move over 1 ATR to $38, where I would trim half my position and then trail my stop by 1 ATR. The final target here would be a move to $40, a significant level on the daily chart. The timeframe for this position is one week.
Two Side Watches: EJH and GDHG, once abnormal volume is sustained and the trend breaks. Both are potential liquidation plays and require skill and extreme risk management. Therefore, it does not suit traders unfamiliar with the setup. A recent example of a similar setup is DTCK from 11/10 and NCL from 11/7.
The post The Weekly Trade Plan: Top Stock Ideas & In-Depth Execution Strategy – Week of November 13, 2023 appeared first on SMB Training Blog.
