1/17/2021 Markets down a bit this week. Looking to re-enter XPEV and take some profits on MRO.

Hi everyone, welcome back! Let’s look at some charts.

This could be the start of a larger pullback, but my guess is this pullback won’t last very long. If we drop down to or near the 350-360 zone, then we can buy the dip.

SPY daily chart below. Key level to watch is still in the 355-365 area (5-7% lower from here).

Daily chart of XPEV below. I exited my swing trade roughly a week after buying (bought at 45.4 and sold at 52). It made a ~2% profit on my account, and I’m glad I got out before we had this pullback.

I’m looking to rebuy somewhere in the 37.5 – 45 support zone, but may enter sooner if we get buying pressure. This would turn the trade into a momentum play, much like the previous XPEV trade.

Lastly, MRO is at the top of it’s trading range, so I’m thinking of trimming my position by 25% by selling my shares in my Roth IRA. My average is slightly above 3.5 so it has been quite a lucrative trade so far. The original plan was to sell in the 11-12 range, but it hasn’t quite been a year yet and I prefer waiting another 2 months to pay long term capital gains taxes instead.

MRO daily chart below:

See you at the next post!

1/13/2021 Sold XPEV at 52 today (bought at 45.4). I don’t like the price action and was expecting a gap up and go.

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.

1/7/2021 Bought a near full position of XPEV at $45.4 today for a swing trade.

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.

1/3/2021 Happy new year. Markets still going up, BABA rebounding and I’m looking for a retest of lows before entering long.

Hi everyone, happy holidays and happy New Year!

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.

12/27/2020 Happy holidays! No change to bullish outlook. Eyeing $BABA for a swing trade (long).

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).

Let’s see what happens next week.

12/20/2020 QQQ closes well above 305. I’m bullish again on QQQ as long as it stays above the low 300s.

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.

Happy holidays, see you next week!

12/13/2020 And down we go? QQQ signals weakness, and I’m bearish short term unless QQQ closes above 305.

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.

12/6/2020 Indexes up roughly 2% this week. Still cautiously bullish, but if you are long, it’s a good time to sell (short term).

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.

Enjoy your week and stay safe.

11/29/2020 Stocks up this week as predicted – still looking like more upside in the near term. Discussion of SPY, XLE, and XLF.

Stocks were up this week on low volume due to the market being open only 3.5 days this week. I suspect we continue higher since we are holding the breakout level without any signs of a pullback.

SPY weekly chart below:

Another reason why I think markets are bound to go higher is because the weaker sectors within the SPY – XLE and XLF (Energy and Financials respectively) have been outperforming.

XLE and XLF weekly charts below:

Let’s see if we get any sort of pullback this week. I think it’s still more likely we go up.