Traders,
I look forward to sharing my thoughts and top ideas with you for the upcoming week.
As I went over in detail in my latest Inside Access meeting, it pays to be nimble, open-minded, and respect critical levels in the current market. While I was bullish coming into the week, once the market broke critical support, below a declining 5-day and weak market internals, the trend was your friend, and fantastic short setups presented themselves. Namely, as I discussed and reviewed in the IA meeting last week, semis and, specifically, NVDA on the short side were some standout opportunities.
Now, for the upcoming week, here’s where my focus is. Of course, this can change instantly, depending on breaking news or significant overnight directional gaps.
TSLA: Failed Move Higher = Fast Move Lower
The Idea: After displaying relative strength and breaking above multiple key SMAs, Tesla stuffed and engulfed its breakout to the downside on significant volume.
The Plan: I’m looking for a bounce in Tesla toward its multi-day VWAP and potential resistance near $216 – $220. If the bounce fails, providing a well-defined level to risk against, I will look to get short versus the high of the day and target a move toward Friday’s lows as target 1. Stop will be trailed on a 5-minute timeframe.
*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 Focus: Semiconductors
Semiconductors (SMH) are now below declining key moving averages and in a firm downtrend, having confirmed a lower high. The sector is now closing in on potential support near $210 – $211 from the beginning of August.
Within the sector, the best trading opportunities for me, due to liquidity, range, and volatility, have been in SOXL and NVDA.
Now, for the upcoming week, there are multiple possible scenarios that still need to develop to really get me interested. Namely, further weakness toward the support area, and once it is confirmed as support, after the fact, a short-term relief rally ensues for a day or two. NVDA and SOXL would be my reactive vehicle of choice here.
Alternatively, in an extreme scenario and one which would offer the best risk-reward for me, a gap down occurs, and/or rapid weakness with corresponding internals shapes up, setting up momentum scalping (short) in the short term and a more significant bounce opportunity once the setup has confirmed and weak hands have been shaken out. For such a scenario, it’s important to ask yourself: what would that look like? What price action might confirm capitulation and a possible turn? What would serve as confirmation, and what checkmarks/variables need to be present to turn such an opportunity into an A+ bounce trade?
*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.
Key levels I am watching in NVDA: For a failed bounce, I am watching previous support turned into resistance, near $105 – $106. For intensification of selling and potential capitulation to the downside, before a bounce shapes up, I am watching the huge psychological whole number of $100. Ideally, momentum intensifies through the whole number before setting up for the potential bounce trade.
BENF: Day 2 candidate. Although unlikely, I’ll have alerts set for a failed move back toward its 2-day VWAP for a short. Ideally this gets a dead cat bounce toward $2.5 – $2.7, which is a likely area of failure. If that occurs, I will look for a short versus the high of the day and hold for unwind toward $2.
*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.
BLMZ: This is a potential day 2 candidate. If the stock can push back above its multi-day VWAP and fail to follow through, I’ll look for a short versus the high of the day and target a move back to lows from Friday.
*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.
WHLR: Threshold name and micro-float, which together warrant significant caution. Not a name to chase weakness or strength. Instead, I’ve done well selling resistance and buying support. $7 is the key area and inflection point for the backside and momentum shift.
*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.
HOTH: Small cap stock setting up for a potential T+1, liquidity trap. If this reclaims $1.10s / multi-da VWAP, and volume creeps back in, it could have a short-term squeeze above its day 1 high.
*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.
