Traders, after a hectic week, we’re returning to the more familiar watchlist format with the outline below.
My approach last week was well-suited for the high-volatility environment, marked by fear, uncertainty, and significant headline risk. It played out well throughout the week.
While volatility and uncertainty are still elevated, volatility might begin to calm down and subside thanks to the tariff exemption headline that dropped late Friday.
The exemptions, which mainly benefit consumer tech, computer, and semiconductor companies, will likely trigger a significant gap when futures open, especially in the Nasdaq.
That said, anything can happen in this market. But there’s clearly a shift in sentiment and narrative.
So, here are my plans, which mostly revolve around Friday night’s news. I’ll focus on two individual names, Apple and NVIDIA, which showed impressive relative strength on Friday and were positively impacted by the exemption news.
Gap, Give, and Go in Apple
Unfortunately, the headline came out while the market was closed. Many other traders and I had been preparing for the exemption headline, and we would have been quick to react to it intraday.
Now that the breaking news opportunity is gone, the plans have changed. Instead, with the stock likely to gap significantly, I’ll look for a potential higher low or gap give-and-go setup to enter long for follow-through intraday.
*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.
$200 is a significant area of resistance, but for now, I find it hard to believe that the stock re-tests that early on Monday, confirming newfound support. So, I’m more open to a gap toward $208 on the low-end, liberation day 1 gap, and the previous pivot-low and 20-day SMA, or higher end closer to a gap fill between $215 – $220.
The only opportunity to go long is if the stock gives up some of its gap in the pre-market or off the open before confirming a higher low and stabilizing above its intraday VWAP. That Gap higher, Giving back early on, and reclaiming VWAP following a higher low would be the setup I look for in order to go long for intraday continuation higher.
Similarly, I’ll be looking at NVDA for the same thing.
Intraday Momentum Higher in NVDA
With the stock set to gap higher on Monday, I’m not looking to chase strength in NVDA, AAPL, or the index ETFs. The skewed risk-reward opportunity will only be present with High EV if they continue to display relative strength after a morning flush.
So, if NVDA, after gapping up a few percent, pulls back in the morning and confirms a higher low, along with relative strength to the market and its sector, I’d look to go long versus the previous higher low or LOD for a move higher. Specifically, in both cases, I’d like to see a reclaim of VWAP intraday and failure to hold below thereafter, which might confirm institutional buying and a steady intraday uptrend.
*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 both cases, I’d look to trail my stop intraday using a hold above VWAP, higher lows on the 5-minute timeframe.
Conversely, suppose the gap fails to follow through and both names and the overall market hold weak underneath intraday VWAP and pre-market support. In that case, I’d be open to momentum intraday short scalps if the news proves to be a sell-the-news opportunity that offers exit liquidity for some. While unlikely, I remain open to that possibility if the gap is huge and an outlier.
Additional Thoughts and Ideas:
Other Ways of Expressing the Idea: I’d also consider potentially expressing the idea with intraday momentum scalps in QQQ and SOXL, a 3X semiconductor bull instrument.
Then, barring any major, sweeping negative headlines or developments for the economy and market that result in significantly increased fear and uncertainty, I’ll also be keeping an eye on volatility to disconnect slightly and present a short opportunity as fear perhaps subsides. If the market continues to base above its now rising 5-day moving average and can close strong for a day or two, VXX will be the go-to focus there for some decay.
*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.
Lastly, I’ll also be keeping a close eye on GLD and gold miners (GDX) for potential failed follow-through for a short opportunity after their historic run higher. If we see some deals announced this week with trade, bonds stabilize, and equities firm up, we could see some air out of GLD and miners. In GLD, for example, I’m specifically looking for either a FRD setup after three consecutive gaps, or a fourth consecutive gap and failed follow-through setup to get short for a potential multi-day swing.
*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.