Trader’s
Given the current environment and the range opening up, this week’s watchlist will differ from the usual and instead include some general thoughts.
Alright, now all eyes are on Sunday futures. It’s difficult to have a set plan coming into this week, given how things opened up at the end of last week. It’s a trader’s market.
*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.
QQQ’s are now nearly 7% off its 52-week high and were down almost 5.5% last week. $700 is the all-important support zone and the line in the sand for bulls. A major level of interest for the upcoming week.
As I mentioned in last week’s watchlist and my most recent Inside Access meeting, it remains a move-to-move tape. You have to know when to swing, when to scalp, and when to do both. Different environments call for different hold periods. At least that’s the case for me.
Even after Thursday’s bounce and catching SKHY, SOXL, and NBIS on the long side, I refused to hold them overnight for continuation given the market’s HTF positioning and everything I covered in my recent IA meeting. Unless we get an outlier gap down and reversal off panic / capitulatory lows on Monday, that will remain the case.
Alright, let’s start with the ideal scenario first.
Given Friday’s reversal in QQQs, the exceptionally weak close, and a major engulfing move lower (Friday vs. Thursday) in many prior-leading tech names, I think a gap down/some continuation is possible early Monday. So I went out Friday with a small put position in QQQs. I’m not calling for a Black Monday crash like many online. Not at all. However, Thursday’s move caught many on the wrong side, and Friday’s action and weak close were far from reassuring for dip-buyers and perma-bulls.
Now, if we do get that gap lower / panic-driven washout, I will not stay short. In fact, I will be quick to exit the small short exposure I have and stalk intraday relief/mean-reversion opps. Similar to Thursday’s bounce and opportunity, in a volatile market environment, I try not to hold a lengthy bias and instead follow the trend while fading any extreme/outlier move… like the gap-down and reversal on Thursday, then positioning short on failed follow-through on Friday.
I’d mostly focus on the following names, and narrow the list to whichever offers the best firming-up action and level to trade against, plus whichever panicked out the most and showed the largest outlier move both intraday and aligned to its higher time frame.
Individual Names on Watch: NBIS, SKHY, MU, SNDK
ETF’s: QQQ, SOXL, VXX / UVXY
When we enter a period of up-ticking volatility and the range opens up in the market (SPY / QQQ), I quickly shift playbooks and strategies to focus primarily on momentum scalping while a trend holds firm. If we open flat/slightly negative and hold weak, I’ll look for short scalps. If QQQs are sub 700 key support, and fail to reclaim/bounce, I’d look for short scalps. But when will I stop following the trend? If big $TICKS are followed by bigger $TICKS, and we start to capitulate in either direction while extending significantly from intraday VWAP, I’ll look to fade the move for an intraday mean-reversion scalp. But of course, that style of trading hinges on the market continuing to have elevated RVOL and volatility, not an inside day/chop on lower volume.
So, if we open flat or slightly gap up and have an inside day? I’d likely be hands-off in that scenario and focus on in-play names with a catalyst. Remember, we have a BIG earnings week ahead, with NFLX, SPCX, TSLA, META, and BE all reporting next week.