Traders,
Im excited to present several new ideas, all of which hold the potential to make significant directional moves, just like last week’s plans and ideas in Netflix and Meta did.
I will share my thought process and actionable trade plans with you, as always.
Before I present my two top swing focuses for the upcoming week, here are some key reminders and lessons to note.
Last week offered exceptional opportunities, but missing out or mishandling them might leave you feeling like you underperformed. Instead of dwelling on that, focus on studying the A+ opportunities that came your way. Be proactive, play to your strengths, and avoid rushing into subpar setups in the upcoming week out of FOMO.
A critical catalyst for the upcoming week: Nvidia’s earnings report is due Wednesday after market close. This highly anticipated report could significantly impact Nvidia’s stock and the entire sector and market. While I won’t trade Nvidia before earnings, I’ll be ready to react based on the results and price action afterward. Before earnings, I’ll study the sector’s critical support and resistance levels and top setups.
My two top ideas for the week:
Backside short in SMCI and/or overextension bounce play
The top play of the year was on Friday, shorting SMCI after the exceptional run higher and its record-breaking RSI hitting 99. I won’t go into detail here, summarising the opportunity or backstory, as it has already been covered online.
As you will know by now, once a stock tops out in the short term, I like to look for lower highs/pops into potential supply to short for a 1 – 2 day swing short 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.
That is the first plan in SMCI.
Two key areas I will be watching ahead of the catalyst on Wednesday will be for SMCI to push higher into what will turn into the 2-day VWAP and a level from Friday, $900. Beyond that, I anticipate a move into the $950 area, which is also a potential supply zone.
Therefore, my plan for continuation is as follows: If SMCI can push into $900 – $950 to confirm failure and provide a pivotal level to trade against intraday, I will look to get short versus the high, seeking momentum lower.
Specifically, I will target a move toward $850 to cover a large portion of the position, and after that, trail my stop using lower highs on the 15-minute timeframe or manually exit my position if the stock reclaims the intraday vwap and spends notable time above it. My final exit would be a move below Friday’s low, where I will manually exit the position as it makes new lows. I plan to hold the position for a full day once entry is provided and potentially overnight if it closes weak, near the day’s low, without achieving my final target.
The second plan for the stock is an overextension to the downside, providing an opportunity for a relief bounce.
Specifically, I would be looking for a gap lower and/or significant sustained selling pressure resulting in a move toward $700 – $600. If the selling pressure and expansion to the downside are present, I will look for volume to increase, along with the stock swiftly moving off the low. The confirmation and entry opportunity would be a higher low after the bottom, providing a level to risk against, along with confirmation of a short-term momentum shift.
After that, I will enter long with a stop below the higher low and target an initial move to the intraday VWAP to cover half of my position. The remainder of the position would be scaled out on new higher highs on the 5-minute timeframe, with the stop being trialed by the previous higher low on the same timeframe. The timeframe for this trade would be up to one full day.
Consolidation breakout in ARM
ARM is another hot stock within the sector setting up for a significant directional move.
After a serious move higher post-earnings, it has spent several days consolidating in a tight range. As a result, a straightforward, reactive breakout trade with favorable risk: reward has now set up.
*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 is the plan:
Friday’s high and Friday’s low align on multiple timeframes as resistance and support of the consolidation.
Therefore, my plan for ARM is reactive and open to going either long or short, depending on the directional move.
Due to the sector catalyst this week, I am keeping this to a likely one-day full-hold timeframe.
The plan for the long: If the stock breaks above Friday’s high with authority, I will look to get long, with a stop below the breakout level or the most recent higher low on the 5-min chart, targeting a 1 ATR (12 points) up move in the stock.
The plan for the short: If the stock breaks below Friday’s low with authority, I will look to get short, with a stop placed above the breakdown level or the most recent lower high on the 5-min chart, targeting a 1 ATR down move.