Happy Sunday, Traders
I’m excited to share several new ideas with you today. All of which I expect are poised to make significant directional moves this week. As always, I will also give you my exact, actionable trade plans with entry and exit targets.
But before I share that with you, I want to discuss the shiny object syndrome. This is something that many traders, including myself, struggle with from time to time and lose money as a result.
I refer to the shiny object as the most in-play stock, with the wildest range, spread, and volatility. Often offering little to no edge for my system or other traders alike. Just because something is moving, like VVOS on day one this week, doesn’t mean there is an edge, or you need to be trading it.
Before jumping into the hottest stock of the day, ask yourself if you have an edge and have identified a high probability setup or if you are jumping into the stock out of excitement and fomo.
Now, traders, let’s jump into my new ideas for the week. These ideas are diverse and cover an array of setups.
Breakout Setting Up In DASH
Breakouts continue to work in this market, traders. We saw that with my idea in AFRM from last week, which had immense continuation after the breakout.
DASH has consolidated beautifully at its 52-week highs for a couple of weeks. It’s evident now that resistance is $96 and support is $93.
*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.
So, if the stock can hold above $96 with authority and an elevated RVOL, I will look to enter long, half of my desired size. I will risk half an ATR on this initial entry, which puts the stop around $94.5 – the middle of its range.
For starters, I don’t want to see the stock re-enter the range, especially not back to the middle of the range after it has spent time holding above $96.
I will get my full size once the stock takes out Wednesday’s high of $96.99 and then raise my stop to $95.50, the resistance on the hourly chart last week.
From there, my first target to reduce a third of my position is 1 ATR, around $100. Then, I will trail my position using the hourly chart’s higher lows and reduce my position by another third of each ATR in my favor until I am entirely out around $107 or I have been stopped out. The time frame for the trade here is 3 – 5 days.
Continuation in the IWM
IWM had a monster breakout on Friday and led the way in the market. I am looking for a continuation for the upcoming week but will not chase it up here. Instead, I am looking for a pullback and higher low to enter for 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.
For an entry, I will use the hourly time frame here, which is my preferred time frame for swing trades. Ideally, I am looking for a pullback between $183.50 – $184 and confirmation of a higher low to enter. Given the extent of the move on Friday, this might take a few days to set up correctly.
Once that higher low has been confirmed, I will look to enter with a stop placed below the higher low. Alternatively, if the IWM consolidated near Friday’s high for a few days, I will look to buy a breakout of the highs.
My ultimate target for the IWM is $190, and I will give this position a whole week to play out or stop me out.
Pops to Short in Last Week’s Small Cap Movers
There were some fantastic opportunities last week in the small-cap space on both the long and short side. However, coming into this week, on the stocks that have already failed, the edge is now to the short side if they experience liquidity pops / dead cat bounces.
So, my plan is the same for these three stocks: ALT, CYTO, and MINM.
I have alerts set in all three for potential bounce zones that I would be interested in getting short if price action confirms.
So, for example, in ALT, I am looking for the stock to trade higher into three potential failure zones to get short for an intraday swing short.
*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.
First, I am looking for the stock to trade into $4 – $4.10 and confirm failure. If that occurs, I will short versus the high of that move and target a move toward $3.50 to cover half of my position and hold the rest for close unless the stock experiences a VWAP reclaim or stops me out.
Other zones I am watching for a bounce and failure: $4.5 – $4.8.