The Shakedown 7-5-20

LAST WEEK, S&P 500 (+4.06%):

Monday: +1.47%

Tuesday: +1.28%

Wednesday: +0.70%

Thursday: +0.55%

A couple weeks back, the market closed the week looking quite vulnerable. We came into this week very cautious, wanting to see key support levels hold Monday morning. Then, once we saw the Nasdaq take out a key support area to the downside and quickly reverse back to the upside, we took that as our cue to get long. That subtle action, taking the cue to get long, was the deciding factor whether or not you got paid last week as it was the start of a 4 day rally. That was the best time to buy. Now, after 4 consecutive days moving higher, things get a bit more tricky for new entries.

The one thing we know about the market this year, is that if you're buying when things are looking ugly, you're likely getting paid. If you're waiting until everything perfectly aligns to put a trade on, you're likely getting chopped up and only buying once moves are a bit exhausted. Trading is not easy and this year is no different, but there has been some amazing opportunity out there.

I am far from chomping at the bits to buy the open Monday morning. If we get a Monday-Tuesday down move, that we see supported, then I would be much more inclined to put some new risk on to the long side. The weekly chart of the S&P and Nasdaq both say we go higher from here, which shouldn't be a surprise after we get gifted four straight green days off support.

The question on my mind, is whether or not we see the summer slowdown that often comes after July 4th until Labor Day. We've never see a situation like this where the general population is instructed to stay home, so that volume could stick around, but I can't say either way.

Summer Trading: if you're a day trader in the slightest sense, do not waste your time with size trying to trade low volume environments. The first 3 summers of my career I could categorize with overtrading low volume environments and just giving myself headaches when there isn't much going on. This is a time more than ever you want to make more of macro gameplans, buy off support, dont over-risk, and let things work on their own.

My plan for the week is to come in pretty hands off Monday morning and see what the market gives us. After four days up, and what we've seen this year, I would anticipate a buyable pullback in the latter half of the week. Everything changes once that price action hits the market, but in an ideal world that's what I'm looking for. Don't see a ton of setups I'm really trying to rush into Monday morning ---- which would be the fifth straight green day, something we haven't been able to do all year.

Earnings season kicks off July 14th.

Earnings Season Picks Back Up 7/14

Click the above picture for a full list of the companies reporting this week

Potential Shorts on Watch


Shockwave Medical is a thinner name, averaging just over 400k in volume everyday. What I love about this setup is that it's looking to overtake a macro resistance level at 48, with a tight daily flag in front of the level. Anytime you can mix the macro with the micro is generally a positive. So, in this instance, SWAV giving us back to back weeks in front of a macro resistance level is a great prospect.

Looking for volume through the 48/48.50 area. Earnings are five weeks away on August 10th, so there's still ample time for a quality breakout. 

Trigger: $48/48.50

Stop: $45.89

Target: $56-60+

Hope to see you in the chat Monday!

Watchlist coming in the following email.

1 comment

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