Happy Sunday, Traders
It’s safe to say that volatility and uncertainty have returned to the markets, and with that, the range has opened up, making for a pretty solid trading environment. I hope you all were able to capitalize on the vast opportunities that were presented this week or, at the very least, were able to expand your knowledge and playbooks.
Before I get into this week’s watchlist, I want to go over what I believe is a critical concept and topic: managing expectations. Traders, yes, the range expanded last week amidst increasing uncertainty after the FED announced that rates will likely remain elevated for the foreseeable future. However, in the near term, I will not expect every week to be as fruitful or volatile as the previous week.
It’s important to keep expectations in check because If I don’t, I can find myself holding positions for too long, overtrading, and going vastly out of sync with the overall market. So, while last week was pretty crazy, I am tightening my focus for this week and putting my guard rails up after many leading stocks have already experienced significant momentum to the downside. The last thing I want to do is chase stocks lower and short them deep in the hole.
So, while the majority of my focuses have materialized well since I began doing these watchlists, for the week ahead, I am managing expectations while many charts and the overall market look to find their footing and shape up once again.
Last week, I had two main focuses: one potential short and another long idea. The short idea in PLTR shaped up well and almost reached the $13 target. While I am no longer in this position, if the stock remains heavy, around $14, I could see it continuing lower into the $13 target. The long idea in CGC was invalid from the beginning of the week after the stock announced an offering on Monday and traded lower.
So, with the above comments and mentality in mind, let’s go over two main ideas I have on watch for the upcoming week.
AutoNation (NYSE: AN)
My Trade Plan for AN:
*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.
For the last couple of months, shares of AN have consolidated below $160, and in recent weeks, the stock has begun consolidating near the breakdown level.
A bearish consolidation has formed below short-term declining SMAs, such as the 50-day and 5-day. I like the clear risk: reward setup here, with the $149 area acting as critical support and the inflection level and the 200-day acting as a potential target for the trade.
Therefore, I am looking to get short if the stock can break below support and see that level turn into resistance. I will then enter short with a stop above the high of the day if there is a clear lower high or $152, as that area acted as resistance on Friday.
As mentioned, my target for this short swing would be in the area of $140, a previous breakout level and near the 200-day moving average. I would have a 3 – 5 day hold timeframe for this position.
META Platforms (NASDAQ: META)
My Trade Plan for META:
*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.
While META displayed impressive relative strength this weak compared to the sector and overall market, it’s not out of the woods yet as a lower high looks to have confirmed on a higher time frame.
I see two potential swing trades for META in the upcoming week. Both depend on a clean break of support or resistance.
The long idea: if META can break above and hold above Friday’s high, with sustained volume and relative strength to the overall market, I will look to go long, risking the day low. My first target would be potential resistance near $312, where I would look to take off half of my position. The second target would be between $315 and $320, where I would use my discretion to close the position. That will depend on what the overall market is doing and if the volume and short-term trend in META remain intact.
The short idea: If the market remains heavy and META takes out last week’s low, around $293, I will go short for a momentum swing trade, targeting $280. My stop would also be tight, risking the day’s high, and would have an expected trade timeframe of about three days here.
The post The Weekly Trade Plan: Top Stock Ideas & In-Depth Execution Strategy – Week of September 25, 2023 appeared first on SMB Training Blog.
