I’ll discuss this trade in more detail this weekend (with a chart if I remember).
The bottom line is I was expecting the momentum to lead to a big gap up today, but that didn’t happen. The risk reward at 52 isn’t quite good enough to target 70, so I’m waiting to re-enter if it drops back to the 45-48 range with a target near 70 and a wider stop.
Hi everyone. I’ve been looking at XPEV for a while now, and ended up buying lots of shares at $45.4 today. The strategy is that the stock won’t go below the low of today, so my stop loss is at 42. My profit exit is at 51 or higher. I’m not selling below 51, and I have the option to reevaluate if it reaches 51 to hold for longer.
XPEV daily chart below. I plan to hold it for a 2-8 weeks.
Markets are still slowly grinding upwards, and I don’t expect that to stop anytime soon. From my observation, this kind of price action leads to slow upward moves with small, less than 5% pullbacks. I am looking to buy any substantial pullback (more than 10% drop) aggressively.
We are due for a larger correction (10-20% drop), but if that happens, I see it as a buying opportunity. Because of this bad risk/reward at these elevated levels, I don’t like buying here. Shorting makes more sense, but is usually not a great idea at these levels because of the strength of the upward momentum.
SPY weekly chart below. My best guess of a local top would be rapid buying acceleration, which hasn’t happened yet.
BABA weekly chart below. I’m still looking for a good long entry (eyeing 185-210 range, but will start buying near 210). Stop loss near or just below 170.
Hi everyone, happy holidays. I hope you also have a great new year!
Since QQQ has rebounded nicely off the recent pullback, I believe the next leg is going to be up. I still expect volatility to increase, so instead of buying or selling here, I would be looking to buy options (both calls and puts), in anticipation that they will be worth more when volatility increases.
SPY weekly chart below – it closed flat this week.
BABA weekly chart below. I like the odds and risk reward of being long here, but I’m planning on buying on a retest of the current low at 210 for a better entry.
My trading strategy is to buy uptrending stocks after a pullback, predicting that the uptrend will continue instead of being a reversal of trend. The risk reward is good at current prices, but I plan to start a position near 210 (retest of previous low).
Hi everyone. It looks like the indexes recovered very quickly from last week’s down week. Since QQQ has closed multiple days above 305, I’m bullish again. Volatility seems to be increasing, so anything could happen. If QQQ does end up closing below the low 300s on a daily basis anytime starting next week, I will likely be bearish again. Let’s see what happens.
QQQ daily chart below. I suspect that if we near the high 290s to low 300s again, we will get rapid selling.
SPY daily chart below. Key level to watch is the 350-355 breakout level.
Hi everyone, I hope all is well. The indexes are signaling to me that we are ready for a larger pullback. If we don’t get a larger pullback here, I expect the exact opposite to happen – a very strong upward breakout. If I was playing options here, I would bet that volatility will increase significantly, meaning I would be buying options.
We had a significant down day in QQQ this week, signaling that we will move down more next week. If QQQ has a daily close above 305, I think the current pullback will end. Otherwise, I think we work our way down to 280.
QQQ daily chart below:
If we go short here, we would risk about 3-5 points up (hard stop loss at 307, mental stop is a close above 305) and the reward is a little over 20 points down (profit exit at 280). That’s a risk reward of at least 4 to 1 which is really good. Most of the time we will be wrong here, but we only need to be right 20% of the time to break even (since the risk reward is 4 to 1).
I think that QQQ will drag the market (SPY) down if it drops, which is why I discussed my outlook on QQQ this week.
I’ll keep you updated during the week if any developments cause me to change my mind about the direction of the market.
Hi everyone, welcome back. Indexes aren’t moving as much so I’ll keep the post short.
I think we will continue higher, but now would be a good time to take profits because I think we could have a small to medium pullback (5% – 10% drop) sometime in the next 3-4 weeks. Risk reward favors the downside now, so it doesn’t make sense to have large long positions here. We can always add back to our positions on the next pullback.
A good sign that the pullback is buyable is if we see small red candles down near the 350 range. 350 is a reasonable short term buy level where we would use a very tight stop loss no more than 5%. If it continues to break down and close below 340 on a weekly basis, I would assume the bottom end of the range near 320 will be tested.
SPY weekly chart below. We are still well above the trading range breakout level at 350. No reason to be bearish yet.
Let’s see what develops next week. The energy sector continues to outperform, with financials being in line with the SPY this week.
Hi everyone. Stock indexes are slightly down this week, which is suggesting that the upward momentum has slowed down. Usually this means we start moving sideways or down, but I think we will move up because there is less uncertainty surrounding the vaccine and the elections.
SPY weekly chart below. I’m bearish if we close next week back within the trading range indicated.
XLF (financial sector) is still doing reasonably well. Weekly chart below:
XLE (energy sector) continues to rebound this week. Weekly chart below:
Have a great week and enjoy Thanksgiving if you celebrate it!