Traders,
Right before I discuss my top ideas for the week, I wanted to briefly mention an important observation. An elevated VIX, as we currently have, is extremely different from a subdued VIX.
When the volatility index is trading at elevated levels, swing trades become more risky as significant overnight directional gaps become likely. Move2Move type trading, along with trading volatility products and index ETF’s provides fantastic opportunities each day.
Overall, the anticipation of a recession has now impacted flows and sentiment with stocks, along with a higher VIX, which puts the overall market and sectors in play versus individual stocks.
So, with a move2move focus and a trader’s market mindset in mind, here are my focuses for the upcoming week:
Move2Move Bounce in SOXL
Almost 60% off from its high in a matter of weeks and a relief bounce in SOXL is becoming increasingly likely and attractive from a risk: reward perspective for me. For me, it has become highly stretched, with an expansion from essential SMA’s and higher timeframe capitulation to the downside. As mentioned, this isn’t a swing tape, so I will look for day trades. The only swing positions I will take are if the trade works out well and closes near the high, then I will take a small piece overnight for a gap continuation.
*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.
Here’s my plan:
The A+ version of the setup would be if the market gapped lower on Monday and SOXL was down another 5 – 10% +, setting up an intraday washout long reversal pattern. In that case, I would be closely watching price action for signs of a bottom, looking to enter long on the right side of V, i.e., once the stock marks a LOD – reclaims its intraday VWAP, and/or makes a significant higher low, with volume to back it up. I’ll be trading this on a reduced timeframe as it is not a swing position, using higher lows as a trail and reducing my position on higher highs and extensions from its intraday VWAP.
My plan in TQQQ—triple-levered QQQ ETF—is very similar to the plan in SOXL. Like my plan in SOXL, a gap down or further weakness in the overall market at this stage in the down move would increase the expectancy of the trade and overall risk: reward for me.
Now, along with the general thesis and idea for the ideas mentioned above, very similar plans can be laid out for several stocks that have extended to the downside in the short term. So, in that regard, I have a growing list of names that I am monitoring for similar style moves to the plan mentioned above. For example, MSFT is another name I am closely tracking for a relief bounce after it’s sold off almost 13% from its high in a few weeks, trading at its lowest RSI since 2022. Again, ideally, there will be further downside and washout below its 200-day SMA.
*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.
In addition to monitoring several sectors and key indexes, my main focus on Monday and probably all week, along with the overall market (SPY), tech (QQQ), and SOXL, will be VXX – the ETN that tracks the VIX short-term futures.
*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.
An elevated VIX creates insanely great move-to-move momentum scalping and reversion scalping opportunities. In these environments, I excel in rapidly shifting gears from a swing mindset to a move-to-move mindset, and the VXX is a great vehicle for it. So, I will closely watch VIX futures, the VXX price action and chart, and the overall market for cash-flowing scalping opportunities intraday.
Now, this is a different style and mindset from what I have previously discussed, with critical adjustments being made, so I will discuss this in greater detail in the upcoming Inside Access meeting with you on Thursday.
