Happy Sunday, Fellow Traders!
I trust you have had a wonderful weekend, relaxing, catching up with friends and family, and gearing up for a new week of opportunity in the market! I know I have. As Sunday evening approaches, I like to review the previous week, put together a game plan for the week ahead, and pour through hundreds of charts to identify top swing ideas.
Before I get into my top swing ideas for the week ahead, let’s briefly discuss last week’s action. Last week’s watch list went 3 for 3, with TSLA, PHM, and TTOO all trading to the targets I gave in the watch list. Specifically, TTOO and PHM materialized perfectly, providing desired entry and exit opportunities. I recommend reviewing those plans and the action in detail so that you can be better prepared to react accordingly next time the opportunity presents itself. That’s a best practice, and I will always review my trades in detail.
Although the ideas panned out well, I am managing my expectations and not expecting the same outcome for the week ahead. Remember, it’s still summer trading, and the volume and volatility have been slim. For me, it is not an environment to size up in or overtrade. It remains an environment for me to be ultra-patient and disciplined.
Two New Swing Ideas:
Carvana (NYSE: CVNA)
Although the stock has pulled back significantly from the recent high set in July, $57.19, buyers have supported the stock over the last month. Notably, a previous level of support, $36, has held firm over the last week, and the stock has formed a bullish wedge.
The bearish sentiment is loud and strong, especially as the stock remains elevated and up around 770% year-to-date (YTD). However, with the current price action acting firm, I am beginning to think that the bearish sentiment might be fuel for a move higher for CVNA. The short interest remains high, with 36% of the float short, and analysts remain bearish, with a consensus rating of Reduce and a consensus price target predicting a downside.
So, the bearish sentiment and bullish chart pattern have me preparing for a potential breakout.
My Trade Plan:
*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.
A clear bullish wedge has emerged on the daily chart in CVNA. I am looking for the stock to break above the pattern’s resistance at $43 and HOLD over that level, thereby turning it into support. Importantly, I am ALSO looking for volume to increase and be sustained.
So, for the breakout to confirm and for me to enter long, I want to see the stock push over resistance and hold and for the volume to break out and be sustained as well.
If that occurs, I will enter long around $43 and place my stop just under $42. I will have a relatively tight initial stop because once the stock has broken out of the wedge, I do not want to see that move fail and for the stock to get back into the range.
My target for the trade is short-term resistance around $50. As the trade materializes, and if it works, I will look to take profits 1 ATR from entry, so around $48, and piece out of the position between $48 and $50, as that area might have significant supply, and be a potential turning point for the stock. I will trail my stop as the position works, using the previous higher low on the hourly chart.
Celsius (NASDAQ: CELH)
Shares of CELH are having a year to remember, up almost 75% year-to-date (YTD). Most recently, the stock gapped up after reporting killer results for its second quarter.
The company released its latest quarterly earnings on August 8th, 2023. The company reported an earnings per share (EPS) of $0.52 for the quarter, surpassing the expected EPS of $0.26 by $0.26. The company’s quarterly revenue was $325.88 million, significantly higher than analysts’ projected $277.19 million, marking a 111.6% increase from the previous year.
This isn’t the first time the company has beaten earnings and gapped up. The last time that occurred, the stock continued higher by looking at the chart. Given the current setup in the stock, I am looking for a similar outcome once it confirms the breakout.
My Trade Plan:
*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 almost picture-perfect ascending wedge has formed in CELH, with $183.50 acting as resistance and $178 now acting as support.
In order for me to get long, I need to see the stock break above $183.50 with increased volume. In that sense, it is similar to the setup in CVNA. However, given the stock’s large ATR and high-beta nature, I will trade this with a smaller size if the idea triggers and is confirmed.
I am going to risk half an ATR or about $3.5, with a stop placed near $180, If I enter the stock long around $183.50 on the breakout. I will take off half of my position at $190, the whole number, and 1 ATR move from entry. After that, I will sell the remainder of my position by selling a quarter every half ATR that the stock moves up, and I will be trailing my stop by the previous higher low on the hourly chart. The timeframe for this trade, once triggered, is about three days.