On the macro scale, we have a diagonal line that gets tested and backtested every time ES goes up or down. As denoted in the 3 circles every time this line gets passed the market pulls back up down into it to test it as a new buyer’s or a seller’s zone. As of right now, this line has been successfully tested as a new buyers zone and for this week it is sitting at 3120. This is, for now, the ballpark bull/bear level that we will be looking at to see if there are any new developments and if the market shows any kind of weakness/strength. Sitting where it is now it is well above the current conditions for the market going bull however there was some obvious exhaustion in the latter part of last week we must keep in mind. The previous high in the supply was sitting at 3231 and it was raided by a few points on 7/15, but for further bullish action, we would like to see that level completely taken out and held as a buyer’s zone. On the hourly, there are many lines we can try to draw and develop some sort of a bias that suits us however that is completely unnecessary. The market was chopping for the latter part of the week and that is all the information we have thus far. 3180 was held as a demand zone as we expected but no new impulses were created to take the market up farther. Below on the hourly 3180 is an obvious level to watch out for and slightly below that we have the 3150-60 and resting below that level is the 3120 trend bull/bear line.
VIX futures in a peculiar position. Fell out of trading range with a backtest and got sold off but only to the previous breakout. Held the backtest and bounced. Currently, the VIX futures fell out of the latest trading range and backtested it as a new sellers zone to boot. A new DBD supply sellers zone was created on the daily in the 28-29 area and we would like to see that rejected completely for a new leg up in the market. However, right below that is the top of the old trading range so that is something to look to as well. Should the VIX futures fall back into the trading range there is a possibility of a retest of the 18.5 breakout and subsequently, bottom of the old trading range which would mean ES is well on it’s way to ATH.
Someone is expecting a big move out of the Titanic come August with an ATM (At the money) straddle. 2000 contracts of 390C and 380P traded near the ask on Friday around noon. Darkpools have a print on AAPL at 383 while the option chain as a whole is pricing in a top around 435 and potential drop to 360’s. Fib extensions from Jul 7 newsletter still hold and show AAPL in a fib zone between 370-468. As far as the immediate range on the hourly AAPL is chopping back and forth between supply and demand. There is demand below at 381-382 to go along with the whereabouts of the darkpool print so that is an area on watch. Above that is 389-390 that has been tested twice so on the next test we would expect a follow-through and perhaps a backtest to hold it as a new buyer’s zone.
Oddly enough, the same ATM (at the money) straddle again here with 3000C long and 3000P short although for Aug 21 expiry this time. The option chain has an oddball 3300C long for 7/24 with earnings on Jul 23. We strongly recommend NOT to play the earnings for AMZN as premium is way overpriced. 3300C are 15.00 for a 300pt out the money play. Instead, we recommend playing on Friday after IV crushes premium and following the trend AMZN takes. Trend based fibs on the weekly from 2016 show AMZN is in a pocket between 2878-3853. With it already at 2961.97 and being the most used e-commerce platform during COVID, we suspect a probability of a surprising beat. As far as a trading range and levels we see supply above at 3090-3120 that could reject should AMZN start heading there. The 2940 demand worked like a charm and congrats to everyone who played it. Below that there is a DBR in the 2630s level and a leg below we are looking at a weekly RBR with a possible retest of a top of the breakout which spans from 2270 to 2430. Should price start trading in that level AMZN is going to be on high alert for a possible long.
With Earnings coming up on Jul 28th, this is the make or break for AMD to have its ER run. We strongly suspect that this bad boy will finally break and get over this consolidation between 48-59 and breach 61 to hit 68. The option chain is showing a targeted move between 58-60 and our analyst Ghost is long 55C. AMD had an impulse out of the demand zone at 48 however it did not manage to break any of the previous highs. Depending on how you look at it right now AMD is sitting at the top of the breakout zone and trying to hold this level as the new buyer’s zone, should it manage to do so there is a possibility of ATH being contested 1 more time.
On the daily looking like a strange inverted head and shoulders. Not the cleanest looking but if you wanted to make it out, it could resolve. Earnings are coming up on Jul 28 and it’s been consolidating nicely between 231-247. We believe the next push will crack through 247 to push it to the next fib and potentially north of 260. Option chain is pricing in a move from 250-260 and potentially 262.50 if bullish momentum continues/follows through. Odd sweeps came in Friday for 280C for Nov 20th are long about $650k worth. On Friday FB had a nice run and then at end of day came back to retest an RBR demand that it printed, as long as it holds that level at 239-240 there is a probability of a nice run.
Decent pullback from NVDA this week to backtest to see if it would hold the FIB at 400. Although it broke below it a couple times, it maintained and was able to hold it. Hopefully, now it should be able to break for new all-time highs again and potentially crest over 420 to hit 450. Option chain is pointing to a move to 445 but uneasy at the 427.50 level. If AMZN beats, it could be the push it needs to get there. Should it decide to go the other way around however there is an RBR demand on the daily chart around the 383-384 level that could potentially bounce if NVDA does decide to head there. Above that, on the hourly, there is a zone at 410-412 that could reject but it has been tested twice so it’s nothing that we would play blindly. If it manages to get over that level and backtests as a new buyer’s zone then we could see an impulse up.
We had multiple 100% plays on this pharmaceutical ticker on Friday from Ghosts lotto calls. Option chain is pointing to a potential move of 115 this week if volume keeps coming in, however, the minute an offering is announced, this will fall like a house of cards. Option chain is pricing the same fiasco from potentially occurring with puts long from 90 down to 82.
INDICATOR OF THE WEEK: Auto Trendlines
By no means is this a viable alternative to a trader noticing a range themselves, however for a quick and easy look around, or noticing something you might have missed we recommend this indicator. As the name suggests the indicator will paint trendlines where it sees them on any timeframe. https://tos.mx/XeC7Y0m
WEEKLY TRADING TIP
In order to be profitable trades cannot happen by accident. We always discourage blindless chasing or going into whatever is hot now. Just because everybody is trading it does not mean that you must as well, because for all you know 90% of those people are losing. Patience pays and bias kills, we covered that already. Now the next step is developing a system. A system just means having a personal trading style that reflects your personality and character. No 2 traders trade alike, and no 2 styles work the same. A general rule of thumb for every trade is knowing the risk beforehand. That should be the first thing that a trader knows before embarking on a trade to find out whether they had the right idea about the movement in any particular security. As a rule of thumb, we highly suggest employing the following:
1. Find a security you would like to trade and see where you would be interested in a trade
2. Do not trade until the setup you desire presents itself
3. When it is coming close to desired trading levels start watching
4. Have the risk mapped out first! What % of this trade are you willing to lose in order to find out whether you had the right idea about the movement of this security.
5. Map out the levels where you would take profits. Is the reward worth the risk you are putting forth in this trade?
6. Reduce exposure to the market as trade goes your way. Develop a system of profit taking that will allow you to never let a green trade turn red.
7. Once completely out, look to the next trade rather than calculating how much more you would have made had you stayed in the trade (Develops bad habits)
8. Be ruthless with losers. As soon as a SL is hit, cut without hesitation
And there you have it. Having a comprehensive system of trading is a must. If you win randomly, you will lose randomly, and having a system significantly reduces the emotional response to any trade. After all, there is no need for emotional responses to losses or wins when you already have pre planned scenarios for both contingencies.