Quick Summary
Two ways to short SPY, but must wait. Can’t short here. Go long with individual stocks, not SPY. IWM still waiting for pullback entry. CAT (short), WLB, BEAV focus list setups. New additons to watchlist: WLB, DHI, TOL, FB, TIBX, BCRX, AXP. Market Leaders PCLN, GOOGL and GMCR all strong today. ETF GLD short setup. Trades today include +3R partial profit in GDP, TSLA stopped out for -1R loss and SPY short exit for total 2R gain. Still holding UA and CODE long
The Market
Key Pivot Levels: 191.52: new high resistance 187.08: 50 day moving average 181.31: recent low 181-184: plenty of buying in this range.
Under the Hood:
SPY broke out to new highs on low volume on what many are calling a short squeeze. As I noted last night, even with the bearish indications, it is tough to short here given the improvement in small caps (IWM) and price action. Small caps (IWM) again outpaced SPY today, a trend that is good for those long the market.
Trading Game Plan:
There are two setups that will get me to short SPY at these levels. First, as noted yesterday, If the breakout fails and price closes under the breakout line marked on the chart. Second, if SPY continues to melt upward. Stochastics are becomining extremely overbought. I am not ready to short yet because there still may be some nervous nellies unloading short positions. If I do end up taking this type of short position, I will be quick to exit if the trade does not go my way.
IWM still a long play on pullback.
I am not looking to go long SPY at these levels. Rather, I will look for stocks to get long.
Take focus list setups as they come. No directional bias.
The Focus List
Here we find actionable setups culled from “the watchlist” for the coming trading day.
GDP is back on the focus list as it broke out hard into resistance. I took partial profits today, have moved up my stop to the bottom of today’s breakout bar (higher than entry to insure more profit). As it stand right now this trade is +3R (3x what wsa risked).
Now we watch for GDP to breakout to new highs or pullback for another pullback entry. Notice that the moving averges have crossed, which is bullish.
TSLA is still a breakdown-pullback trade, though it mounted the 50 dma today. I was stopped out of this position for a small 1R loss. Often a setup like this requires shorts stops to get washed out. I will stock and see if the 50 dma is violated causing a failed breakout (though I would not exactly call today a breakout).
CAT is still setting up for a breakdown pullback short setup, but just missed my entry level today. I will continue to watch.
New Addition:
WLB broke out over the 50dma on strong volume. Overall great volume pattern. Looking to enter on pullback. Target is recent high at $32, stop is around $28.50. Entry at $29 offers 6:1 reward to risk ratio.
BEAV is in no man’s land as it could pull back more into the gapfill. However, often times a forming range will form and hold. Here entry at $95 with a stop at $93.75 and target at $100 gives us 4:1 reward to risk.
KORS price action today, along with upcoming earnings, takes it off the watchlist. We will still see how it reacts in a pullback or breakout over $100, but for now from a safe distance.
GOOGL made another big move today and is out of range for entry now. It is back on the watchlist.
The Watchlist
New Additions: WLB, DHI, TOL, FB, TIBX, BCRX, AXP
The new additions all broke out either today or yesterday. I’ll be watching for pullbacks.
Market Leaders
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market (TSLA and NFLX certainly haven’t in recent months).
PCLN and GOOGL broke out strong today, and GMCR looks to be pulling away from the gap fill area towards targets for those who entered early.
Sector and International ETFs
GLD broke down hard today from a trend line on high volume. Also notice that the moving averages are about to put in a bearish cross over. This may set up a good short opportunity on pullback.
Current Trades
Partial profit taken in GDP for a +3R gain. Stopped out of remaining SPY short position, overall trade profit of +2R. Stopped out of TSLA for a -1R loss. Holding UA and CODE long. Both are nearing targets.
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