These 6 trade ideas are either immediately actionable or near actionable set ups with triggers near by. For each trade idea, i will give you levels to alarm for entry, potential targets, and other key information to glean from the charts.
What are “Objective, Low – Risk ” Trade locations
Central to my trading process is finding objective, low-risk trading locations. In essence, I want to find trade locations where there is a clean price level to shoot against and where a violation of that line clearly shows me when I am wrong. THe low-risk part of the equation is to take a trade close enough to the price level that the reward is at least 3x the risk. Typically this means shorting into resistance, going long at support, going long a breakout, going short on a breakdown etc.
$DLTR Dollar Tree Weekly
Price peaked in early 2018 at $115. More recently price has made multiple attempts at breaking out and has been consistently rejected at the $112.50 level. Now, price again is being rejected from this key level. Additionally the RSI and PPO indicators are weak and supportive of lower prices. Notice how on each attempt to break out the RSI and PPO are at lower and lower levels. The energy behind the move is fading.
Trade Strategy: I like this lower. Get short against $112.50 – $115 depending on your risk tolerance. I like the November $110P for about $4.70. The Target is the weekly pivot at $96.
Optional Strategies
Sell the Nov 115 / 120 call spread for $1.25. Or combine the 2 strategies for a risk reversal to reduce the cost of a directional bearish bet by buying the November 110P and selling the Nov $115 / $120 call spread as one trade.
Earnings are not until after November expiration.
$SAVE – Spirit Airlines Daily
Spirit had had a wretched 2019 going from near the highs to near 3 year lows. Now though, with price near key support and the RSI oversold, the odds favor a bounce.
Trade Strategy: Keep it simple here. Buy October $37.50 calls for about $2.20 and target a move to $45. Normally I’d prefer to buy more time but earnings are just after October expiration and I typically dont hold positions through earnings. Pre-earnings runs are often bullish so hopefully there will be a lift into October expiration.
$XLP – Consumer Staples ETF – Daily
Being long $XLP has been a blockbuster trade and the place to be for much of the last 2 years. But now price has lost a breakout level signalling a failed breakout. Additionally RSI has lost trend and dipped below 50; both bearish events. Notice also the PPO has put in a bear cross signalling a momentum shift.
Trading Strategy: I think this heads lower. I like looking out to the Oct 4 60.5 Puts with T1 = $59.75 and T2 = $58.75. With any close above $60.75, kill the trade. Note: This sector may be subject to FOMC interest rate decision on Wednesday. If that is concerning to you, lay off the trade until the FOMC clears, then re-assess.
$XLY Cons. Discretionary ETF – Daily
To my eye, this looks like a double top. What seals the deal for me is the bearish divergence in the indicators. Notice as price reaches the prior high the indicators are at significantly lower levels. A perfect entry would have been Friday but we don’t always get what we want. I still think there is meat on the bone.
Trade Strategy: Target the October $121 / $116 Put spread. Try to get it for under $1.25. Current pricing makes it seem achievable. That would give you a 4 to 1 risk reward ratio on a $5 wide spread. Kill the trade at a 50% loss of premium paid. Take profit if price approaches or exceeds $116 to the downside. Note: Amazon comprises about 25% of this ETF and it has been weak. As AMZN goes this ETF will likely follow close behind.
$XLI Industrials ETF Daily
$XLI recently made a marginal new high but it hasn’t been a very impulsive breakout. Notice that it, like the others before it, is a divergent high. Higher prices, lower levels for the indicators. These are inherently weal breakouts and often fail. I think this one will fail too but there is no trigger at this time. No Trigger, no trade, but there is a set up to alarm. See below.
Trade ideas:
Set yourself an alarm at $78.25 for a potential breakdown and failed breakout. If price triggers the alarm, get short. I’d go out in time to the November chain and target a strike at the money. The nice thing about these ETF plays is that there are no earnings worries or single stock risk. You can hold through earnings season and let it all play out. $FDX reports Tuesday after the bell. May give an early read on the sector.
$RNG Ring Central Daily
Ring Central has been a market darling and has doubled off the December lows. Now however, price has dropped $20 in just a few days. Price is currently sitting on key support at $125. This is a binary location. Above is bullish and below is bearish.
Trading Strategy: Bulls maintain the benefit of the doubt until / unless $125 breaks. If you are constructive on the name, get long with a tight stop just below $125. If you are bearish on the market / name, wait patiently for the breakdown. Set yourself an alarm do you don’t miss it. If you get the break, get short via puts against $125. Earnings Nov 4
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Notes:
The charts are and levels are provided as well-informed guidelines. That said, please be aware that exogenous events like surprise tariffs or other events can easily move price through support / resistance zones.
Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.
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