Happy Sunday, Traders!
I’m excited to present several new ideas, all of which hold the potential to make significant directional moves. As always, I will share my thought process and actionable trade plans with you.
So, without further ado, let’s jump straight into my top ideas for the upcoming week!
Continuation in SMCI
SMCI surged higher on Friday after the company said its fiscal Q2 results will likely exceed its prior guidance. The announcement by the company comes just over a week before it is expected to announce earnings on January 29 after the market closes.
*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.
As a result of the breaking news, the stock broke out its base, made new all-time highs, and saw remarkable momentum on Friday, closing near the highs.
Given the strength of the name, the overall sector, and the market, I am looking for a continuation of day two and possibly day three ahead of its earnings.
Here’s my plan:
Given the nature of the move already, I will not be looking to chase its highs. Instead, I am looking for a pullback toward the 2-day VWAP. Ideally, I want to see the stock pull back toward $400- $410 and make a higher low, showing that an uptrend has formed and buyers are stepping in at higher prices to accumulate.
If I see a pullback and higher low confirmation, I will get long once the uptrend confirms, with a stop placed below the low of the higher low. My first target to trim up to a third of my position will be Friday’s high. After that, I will look to scale out of the remainder an ATR above Friday’s high – $450 target.
Relief Rally in MARA
While MARA offered some short-lived bounce opportunities last week, none were A+. However, with Bitcoin bouncing off the $40k mark on Friday and MARA putting in a reversal candle on the daily, it’s now a primary focus.
*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.
Of course, this idea depends on Bitcoin remaining over key levels from Friday, so it will be essential to monitor that action closely.
If Bitcoin holds/continues to bounce, I would like MARA for a multi-day relief bounce after Friday’s action.
I will buy dips in MARA, using the multi-day VWAP from Friday as a guide. So, as long as the action in Bitcoin remains, I will buy dips in MARA toward $15.50, using a time stop. I would not like to see MARA spend time below that area and put in a lower high – that will cause me to stop out.
I have two targets in mind for MARA. My first target is $18, a daily chart level, and about 1 ATR away from Friday’s close. My second target, and more of a lofty one, would be $20 – a significant level from the daily chart and 2 ATRs away from Friday’s close.
Secondary Squeeze in PHUN to Get Short
Two offerings in one week, and remarkably, the stock still closed up over 200%. This looks crowded on the short side, given how it has struggled to trade near its offering prices and remained elevated in the short term.
*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, I would be very interested if the stock were to stage a push over $0.30 and cause some stubborn swing shorts to panic out of their positions, offering a nice exhaust move between $0.30 – $0.40. Such price action and a move would set up an A+ swing short for me.
It’s not too likely to occur, but I will have alerts set just in case. If that move were to happen, I would look for the volume exhaust on the up move, wait for the turn, and a level to risk against before getting short. My stop would be the high of the day, and I would be patient with the short position, targeting a move back toward $0.20 for what could be a highly skewed risk: reward opportunity.
