- 1 Market Overview
- 2 ES [S&P 500 FUTURES]
- 3 NASDAQ 100
- 4 VXX
- 5 US SECTORS
- 6 STOCKS
- 7 SALESFORM [CRM]
- 8 SLACK TECHNOLOGIES [WORK]
- 9 ELI LILLY AND COMPANY [LLY]
- 10 3M COMPANY[MMM]
- 11 GOLD [GLD]
- 12 TRADE UPDATES
- 13 END OF MONTH LEAPS UPDATES [2022 EXPOSURE]
- 14 WEEKLY TRADING TIP: EMOTIONS AND PSYCHOLOGY
Like we said in the last edition of the newsletter, historically the market has been bullish for Thanksgiving week and this week the market showed up again. We gained 100 points in S&P 500 futures hitting some resistance 10 points shy of all time high.
Looking forward we have some catalysts coming such as Christmas, vaccines, lockdowns, and the inauguration day coming so there’s a few catalysts coming. With that being said, let’s take a look at some indices.
ES [S&P 500 FUTURES]
Looking at the S&P 500 Futures we had a 100 point rally. The futures stopped 10 points shy of the previous ATH and are currently trading between 3600 and 3650 waiting for a break of either level to gain direction again.
It is definitely possible for the market to chop between these 2 levels for a week or more, so do watch out for that too. On the upside we have ATH and then not much above, and on the downside we have 3550 and 3500 which is a retest of the old breakout.
Nothing good happens if 3500 is lost, however for now the main focus lies with 3600 and 3550 on the downside to get long on should they hold, and sub 3500 should that level break and hold.
Nasdaq looks to still be consolidating if we look at the absolute tops and bottoms. If we look at the wedge it has been creating along the way however Nasdaq looks like it broke out, and it’s safe to say that as long as 11,950 holds on the low end NQ is going to contest the previous ATH.
Before it gets to that level, if it does, there’s demand at the 12,100 – 12,200 level that could hold so do keep an eye on the index. If it slips under 11.,950 and back into the wedge it could possibly open up to a short towards the bottom of the wedge as well.
Not much changed in VXX. A few times during the week while the stock index was rallying VXX rallied as well, but nothing significant came of it.
On the daily it is still trending down in the same channel that it has since it made the highs in March. The 15 level is demand and it could catch a bid there, and as for supply there is a DBD at 22 and a gap at 25 that coincides with the top of the channel.
Last week was another big week for Energy (XLE) as it posted a 8% advance to end the week. Coming in far second were Financials (XLF) and not much to speak of for the rest of the sectors. Looking at the YTD the technology sector is still clearly in the lead, however it appears to be stalled out here at the top with the energy sector as well as financials carrying the torch as of late.
No clear indication as to which sector might be taking over next, though Industrials (XLI) showed big strength at the beginning of this month and haven’t retraced the gains. Consumer discretionary (XLY) posted a new high and as long as the breakout holds this could be a good sector to focus on for continuance as long as the gap at 155 holds as a buyer’s zone.
Unlike last week there isn’t much worth watching right now with any big catalysts. We caught all the meme stuff from PLTR at $10 to NIO to XPEV etc. but outside of that there really isn’t much going on right now to make any stellar recommendations. Despite that there are a few that stand out from the crows so let’s cover them best we can.
CATALYST: SLACK TECHNOLOGIES ACQUISITION
CRM shares traded 4% down at one point during the Wednesday session due to news that they are acquiring WORK. The reason for companies sometimes falling during acquisition announcements and rumours is because acquisitions cost money, they are not yet proven to work, and there is no guarantee that the amount will ever be recouped and hopefully turn profit. The acquisition rumour however at this stage is still just that, a rumour. The deal is still being worked out, and there is no guarantee the two parties will reach an agreement. At $17 billion Slack would be Salesforces’ largest acquisition to date should it work out, but for now we can possibly play a bounce on CRM should it hold above the trendline in the chart which is the level around 235-245 with a PT in mind at 265 as the first stop.
SLACK TECHNOLOGIES [WORK]
On the other side of the acquisition, or rather the acquiree, is Slack Technologies. By all metrics this is a chase however we never know how much it could potentially run should the acquisition rumours bear fruit. For now we are looking at the hourly RBR at 35-37 level as a potential entry should it hold, and if the acquisition rumours grind to a halt without a favourable outcome there is a daily RBR at 30 level to pick up the stock for a long term hold.
Another way to play this is to open up the weekly chart and see if WORK breaks out of 42 and holds there. Should that happen it’s nothing but blue skies above so that would be a favourable entry as well.
ELI LILLY AND COMPANY [LLY]
CATALYST: VACCINE DISTRIBUTION TO CANADA
This is another one of those rumour/news events but it also happens to look ok on the chart so it’s a double whammy. It appears to be somewhat flagging after the jump in price and as long as it stays above 144 this could be considered to be breaking out of the recent chop. Should 144-145 be supported by buyers this could be a decent trade to 155 as the first PT
CATALYST: POSSIBILITY OF MASK MANDATE UNDER BIDEN
MMM Has been on a steady climb within a channel, nothing parabolic like we’re used to from some of the other stocks/sectors like what happened with technology. Fairly contained on its climb, this could be entered if it retraces to 172-173 and it holds. PT 1 would be 184.5 and PT 2 a gap close to 217.
This is an ETF, not a stock, but we’ve had multiple requests to check out this one so let’s take a look at it.
Quite the fall from grace on gold lately. 15% retraction from the highs brings it from 195 all the way down to 165 as the rotation into stocks continues. Looking at it on the weekly there is very good demand for gold at the 158-164 level so it could make for a good trade should those levels hold. You could scale in there little by little with a SL right behind if you’d like to play the long con. Historically January is a very good month for gold so there is a chance that we see a relief rally here, however if 175 fails to get reclaimed on the upside GLD is going to go even further down.
We currently have 11 winners and 2 losers running for a total of 13 trades many of which we have already scaled profits out of. The winners far outweigh the losers not only in number, but % gains as well.
Some of these trades are up 10X already so taking profits is as needed or as comfortable. The 2 currently losing trades are LOW and INTC each with January 2021 (15% red) and January 2022 (20% red) exposure respectively.
With that being said, let’s touch base.
Entry #1: 3065
Entry #2: N/A
After selling half of Amazon I am personally still holding my July exposure on this ticker. I expect to see at least 3300 should 3150 on the low side hold where I would exit another quarter position and keep the rest for more. For now holding.
Entry #1: 420
Entry #2: N/A
Holding only 15% of this position remaining. Most of it was exited prior to ER but since the gains were so large I’m gonna chance the rest of it through ER.
Entry #1: 36.3
Entry #2: N/A
This trade as well was given in the last newsletter. For now I am holding. We got the bottom entry of the wedge and on Friday it finally broke out. The catalyst is the vaccine however I am planning to exit most of the position before the news actually drops because I think this is going to be a sell the news event. First PT is 38 and second PT is 40. Should it fall back to 36.5 and hold I will add more to the position.
Entry #1: 485
Entry #2: 477
NFLX wasn’t the perfect entry like the rest, but it’s still currently a very green trade. As long as 480-485 on the low end holds, I am planning on swinging this still with a PT of 520 in mind as the first stop. Still have a full position.
Entry #1: 515
Entry #2: N/A
Still holding 15% remaining position on TSLA after selling out of most long exposure as it went up. Looking at 550-560 as demand but the remaining position is pretty much a lotto.
Heads up for the future 500 is a retest of the breakout, should that hit I will swing a position again.
Entry #1: 460
Entry #2: 469
In no particular rush to sell out of ADBe after having averaged up on the initial position. Exposure is for January and earnings are in December so looking to ride this for a bit longer.
First PT is 500 and should it break out from there looking at 530 as the second scale out.
No matter where it goes though do not let it go red no matter what.
Entry #1: 158
Entry #2: 151
Not the greatest of entries on this one unfortunately, and of course that’s because we got in prior to ER. After the average at the breakout level below at 151 though this trade is still 15% down and contracts don’t expire until January so i am very much holding it for now. 160 level should bring us to breakeven/profits so I will be looking to decrease my exposure there. RBR at 152-153.
END OF MONTH LEAPS UPDATES [2022 EXPOSURE]
Entry #1: 65
Entry #2: 73
Still holding the full position on FSLY. Daily RBR at the 80 area, should it break below that I will lock half profits and look to get some more leaps cheaper. 4 hour RBR in the 90s level so it could be a good time to start thinking about hedges. PT is of course the gap close first and foremost and a new ATH beyond that.
Entry #1: 15.5
Entry #2: N/A
No reaosn to get extra greedy on this one seeing as how we had the perfect entry on the monthly RBR at 15.5. Still holding the entire position on this one. Should it slip below 26 I will book half and use the profit to get a better average in the 22 area at the daily RBR.
Entry #1: 45
Entry #2: 38
DKNG is still full position in tow as well. Looking to offload 30% of the position at gap close but willing to part with it if it doesn’t break above 54. If it retraces to 46 – 47 and holds I will be looking to buy more.
Entry #1: 97
Entry #2 143
Holding the entire position still on this one and shooting for 250 where I would offload half position. That’s for as long as 200 holds. If 200 buckles I will ook half there. It’s kind of flagging at the top where it got sold into so if this level gets broken 250 should be right behind.
Entry #1: 255
Entry #2: N/A
Holding the entire position on this one still as well. Should it retrace to 270 I will add more, and if it goes further down to 260 I will add even more there.
Entry #1: 48
Entry #2: 44
First PT for this one is 60 and second PT is 100. Will roll if I have to.
WEEKLY TRADING TIP: EMOTIONS AND PSYCHOLOGY
Every day I get questions about trading strategies. How I prefer to trade, do I use any indicators, price action, what I look for etc. What every single trader overlooks in an entirety is quite honestly the biggest obstacle and biggest differentiator between successful and unsuccessful traders: Emotions and Psychology. There is no one single golden trading strategy that will make you a billionaire overnight, but there are myriads of trading strategies that could make you financially independent if the emotional and psychological aspect of your trading is handled. I can teach you to buy time, wait for opportunities, supply, demand, global economics, currencies…But it’s all for nothing if you panic sell at 10% profit and hold losers to -80% hoping for a comeback. What type of a trading style you want to have is entirely up to you, but it has to tie in with the type of person you are.
What has helped me in my trading career, and life really, is to kind of exit my body consciously from time to time and look at myself from a bird’s eye view. As if I were watching a movie starring myself as myself.
Is this person in the movie making the correct decision? Is he rushing? Does he have all the information he should have in order to make the decision he’s making?
And through Q/A, trial and error, answer the questions to come to the best conclusion possible.
RECOMMENDED BOOK: TRADING IN THE ZONE BY MARK DOUGLAS