Next Bull Run is Underway
Plus Tuesday Watchlist
It happened. It finally happened. The next bull run looks to have begun with the break over long term downward trendiness in #ES $SPX SPY 0.00%↑ QQQ 0.00%↑.
Before we dive in here are the results of the weekend watchlist:
JUST GIVE ME TOMORROWS WATCHLIST:
A couple notes on today newsletter:
It’s long. Sorry about that. Lots of stuff is lining up. Pick what you like. I’m willing to take any and all of the trades below if the conditions line up. But I’m just one dude, I can’t handle having more than 3 or 4 positions open at once.
Roll up trades. Don’t expect a roll up trade to run 500%. Be happy with a bit smaller gain on roll up or extended multi day run trades. Typically, I exit 1/2 the position at 25-30% on a rollup then see where the rest goes.
Try to avoid having multiple positions in the same sector. Below I have listed $AMD,$NVDA,$TSM. I would go with whatever one lines up best for the trade setup.
No as crucial, but I also like to avoid similar setup trades. Take NFLX 0.00%↑ and NVDA 0.00%↑ below. Very similar. Huge run today, I’m looking for a small pullback on a backtest entry-rollup type trade. I should try and take one or the other. Not both. However, if both show huge relative strength compared to the rest of tech, that is when the exceptions come into play.
#ES E-Mini Futures
Upside: 4050, 4080, 4110, **4180**,4215
Downside: 4020*, 4000,3980-3975, 3950, 3915*, 3860, 3810, 3775*
We got a really nice run today. Very strong all day, got a mid day pullback to key support level of 4020 and held. Green candle closed over the downward trend line. All very positive price action. The pump is primed for the next major bull run. But will it happen?
I think it will. Just to reiterate my thoughts from this weekend’s newsletter:
“With 3915 holding, pullbacks getting shallower, trendline tests getting more frequent, in this dumb dumb’s opinion, it’s not a matter of if, but when we finally breakout over this trendline. That’s my bias. Unless the Fed or some other crazy news happens, I’m shifting more bullish.”
But Dino, What about that big resistance point at 4180. Ahh yes. That big ugly candle we got back in mid December. We still need to get thru some major resistance levels to continue higher. Remember, the market doesn’t move in a straight fashion on a day to day basis. Some options I could see happening:
1.) We get to 4100-4200 and chop around those levels and base.
2.) We get up to 4100 or even 4180, then pull back down towards the major downward trend line. Depending on when this happens, price could pullback as low as 3915 again.
Dino, I’m so confused. So you’re telling me the market is going up, down, or sideways? Yes, Yes I am. Ha! In all seriousness, backtesting the downward trend line wouldn’t be surprising. Everyone has been watching that battle zone. Short sellers don’t want to capiulate yet. Still uncertainty with the Fed as well as Earnings Reports. Plenty of news to pull us back. But that doesn’t mean we don’t run higher.
As day traders, I only want an idea of longer term direction. Just helps my bias day to day. If you swing trade, it becomes more important to be correct on things like this.
Finally, for tomorrow, I want to see 4020 hold on any pullback and close over todays high around 4050. Holding these price zones will allow for runs later in the week.
And For Those Who Trade SPY 0.00%↑
Upside: 403, 407, 411*, 417
Downside: 400-399*, 397, 393, 390*,387*,383*, 378, 374*,370
Watch 403 tomorrow. Important level together back over. Any pullback, I want to see 399-400 hold. If you like trading SPY, I would look at going long at a backtest around 399 or take a breakout over today’s high at 402.65
Downside, there is nothing to say go short. If we get a mega reversal, we will have to re access mid day but for now, things look too strong to the upside to think about puts and short trades.
Upside: 290, 293, 297*, 302
Downside: 288,285*, 275*, 270*, 266, 260*, 279-280
Everything lined up today and we got the break over the major trend line at the same time price broke over on the S&P500. Everything is looking clearcut in my opinion.
Tomorrow watch if we stay over 288-290 on a backtest. Could be worth a backtest trade if we trickle down to those levels. On a breakout, wait for 293. (If you want to take an early trade, you could try over 290 if we don’t gap over tomorrow morning).
Longer term, if we do wind up getting a backtest of the major trend line, look for 280-285 to hold. Unless we get a major reversal, I think the bears have a lot of work to do if those areas are tested.
Tickers for Tomorrow:
Trade Idea: 145c>142
Apple showed really strong movement today. Got thru resistance at 138 and then 140 with relative ease. For tomorrow, I want to see it get over 142 with strength and strength in the broader market and tech. Apple is starting to get extended but has more room if it gets over 142.
Trade Ideas: 108c>105
Backtest and hold 103.5ish take 106 calls
AirBnB pulled up really nicely over resistance at 103+ and then closed right near the highs at 105. I don’t want to chase tomorrow if it opens up over 105. I’ll sit it out. If it pulls back under pre market then near the open goes over 105, I’ll probably take the trade. The other option I’m watching is a pullback to 103+ support. If tech shows strength and the pullback looks relatively weak, it would be a nice trade to pick up 2 points or so off 103 which should yield 60-75%.
Trade Idea: Backtest 75+ area and hold take 77 calls.
AMD went into rocketship mode along with the other semis. Price is butting up to a resistance level so I’m hesitant to take a breakout trade over 76ish, but it could work with lots of market strength. I like a slight pullback as the better option. Let some of the premium come out and enter on a backtest.
Trade Idea: 100c>98
Amazon showed surprising relative weakness today. I pretty much avoided it all day because it wasn’t pulling up with the rest of the market. However, it has consolidated nicely and held over 95-96 which is a local support area. For tomorrow, I will only take this trade if it shows relative strength and leading or moving the same as tickers such as QQQ 0.00%↑ AAPL 0.00%↑ GOOGL 0.00%↑ etc. More or less all the big tech names.
On Watch>58
Just on watch for now. It’s a bit volatile and the premiums are too high for an early in the week trade. It will probably make more sense to try a trade on this one on Wednesday or later.
Over 58 could work, but as price gets into the 60-61 area, a major resistance/supply area hits. If I do trade this one, I will probably exit the majority of the position if it hits that 60+ area.
Trade Idea: 110c>107.4 or 112c>109
Crowdstrike is bottoming and consolidating really nice. If this keeps setting up, we could see a good sized pop. I like the two trade options above because a simple 2 point move up to 109 resistance should yield 50% and/or getting up and over 109 with strength we could see the big pop. I like both options as plays. If we gap up, I’ll wait for 109 to trigger or see if we can get a pullback down to 107.5ish for a long entry.
On Watch for rejection off 24 possible 22 puts
In general, I don’t like trading options where the underlying price is under around $50. But I’ll make exceptions for possible big movers when premiums are low.
I’m watching GameStop this week for a hard rejection of 24. Looking at the chart you can see the major consolidation zone dating back to the beginning of last year…lots and lots of supply in that area.
If price does get up 24, I won’t jump in. I want to see momentum dying out or some sort of reversal happening.
GOOGL 0.00%↑
Trade Idea: 102c>100
Google has reversed strong off the 85-90 bottom and come right back up to its long term consolidation/supply zone. There is resistance from 99-103 area, but its the bottom of the zone. It worth a trade because the options are so cheap. Google is usually a slow mover, so I will size down on this trade and not expect a huge runner. 1-1.5 points should yield 50-60% so depending on broader market conditions, if I get 50%, I may just exit the whole position at that profit level.
Trade Idea: 147c>143.76 rollup
Meta was a surprisingly slow mover this morning. I was expecting a bigger pop once it broke thru 140. It did get a small pop and eventually got 85%, so is turned into a good trade. However, putting your money elsewhere today probably would’ve gotten a better result.
Always nice when you’re complaining about making the wrong decision, but the trade still got 75%+.
Tomorrow I still like a continuation/rollup trade over Monday’s highs. If we get thru 145, 150 could come with market strength. Some of what I wrote the other day continues to play out:
“Looking good and I think there is a lot of room to run if it clears the 137-138 area. Not much overhead supply and we could easily see 160 in time with a strong market. Short term this week, if the market is strong, 150 could be in the cards…”
Backtest Idea: Backtest of 355-356 holds take 370 call as a rollup trade.
Netflix blasted thru major resistance zones today and came right up to the next set of resistance zones.
At this point, it’s starting to look a bit extended so I’m more hesitant on a break over some of these resistance levels in the 365 area.
Similar to AMD 0.00%↑ and NVDA 0.00%↑ below, I think a slight pullback entry is the better option.
Backtest Trade Idea: 188 support area holds take 195 calls
I believe Nvidia still has room to run. But it’s a question of getting thru the next set of big resistance levels. Price closed right at a major resistance level at 192. I would like to see a small backtest down to the 188 area and jump in there for a backtest type trade. Again, the broader market needs to be strong enough for these backtest trades to work. If the market is heading downwards fast, I would avoid this trade.
Trade Idea: 45c>44
Shopify is looking like it’s ready to break out of this big base that’s been built up since May of last year. A trade over 44 should work nicely up to 45 resistance. If price breaks over 45 with momentum, that is when things could get really interesting with a massive, upward, multi day run.
Just on watch premiums too expensive. Wait for later in the week
I’m just watching Tesla tomorrow. The options premiums are too expensive for my taste so I’ll look to trade this later in the week.
The stock is showing nice strength and breaking out of the descending parallel channel. Over 144-145 should see 150.
It would not be surprising if the price does pull back and retest the trendline around 135-137. If that area holds, I expect a longer term upward run.
Trade Idea: 98c>96
Really wish I grabbed this trade today one of the ones I’m kicking myself on.
Don’t fight your emotions. They are what they are. But learn to cope, handle, and live with whatever emotions you’re feeling about a trade.
For me in this case, I’m just frustrated. No big deal it happens and other trades will show up. I’m also over it because there is so much lining up right now, we could see huge multi day winners at anytime now.
Sorry for the tangential rant.
Back to TSM…massive run today and closed right at 96 resistance. If the market is just chopping or weak, I don’t expect this trade to work. TSM typically trades slow mad 96 is a big level. Momentum and volume will be needed to push it over.
I’m not loving any pullback trades here. This one is too slow for a bounce type trade. Look to NVDA 0.00%↑ first and then AMD 0.00%↑ if you are sticking in the semis for a backtest trade.
Awesome write up
Nice work, lots of useful information here