Trades about to happen Oct 21

Tickers discussed: SCCO BE TLT HALO CVNA GWPH KWEB LH LGND

“Trades about to happen”  are objective, low-risk swing trade ideas with nearby triggers. Key levels, trade locations, and targets are provided for each set up with plenty of timely commentary to keep you on the right side of the trade.

What are “Objective, Low – Risk ”  Trade locations?

Central to my trading process is finding objective, low-risk trade 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 ( Target )  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.

I’ve set these up in a fast read format so specific strategies have been left to you. I am an option trader but I know many are not. If you have a question or need additional input for any of these ideas, please reach out; glad to help.

Lastly, please double check the earnings date date prior to taking any position. Depending on your process you may or may not want to hold through earnings.

Companion Video

In the 16min video, I walk through each trade and give added commentary around each idea.   Find the video   HERE

Trader’s Couch

Timeless Wisdom from Richard Wycoff in 1907

If any one tells you that they are “battling markets”, gently and politely correct them.  Any battle they may be fighting is with themselves.  And so it is with us as well. Your greatest adversary is the person looking back at you in the mirror. Once you begin fixing the behaviors and psychologies that undercut your performance, you’ll find “battling markets” a lot easier.

Trades about to Happen

$CVNA – Carvana  

Stellar performer $CVNA has price sitting on both the 50ema and at gap support.  A move lower from here and Carvana will have more to worry about than a jam on it’s car vending machine. The gap is $30 wide and targets a move to $170 once inside the gap. Set your alarm at $198 which is where the 50 ema resides.

$GWPH – GW Pharma

Aside from the punch through in March, buying $95 on $GWPH has been a lucrative proposition.  Price has spent the past 2 weeks sitting on key support. Even the recent broad market weakness could not crack it.   You can either put it on your watchlist or step in now.   I would look out to at least December, if not January, on your options chain.  You could set you stop at say $93 / $92.50. If you get stopped you get a papercut.  But if not you may find yourself  between $120-$140.   Note the unfilled gap between   $120-$130.

$KWEB –  Chinese Internet ETF

Chinese internet giants, BABA / Tencent / JD / BIDU / PDD / TRIP  are the top components within KWEB and all report over the next 2-3 weeks.  If you want to take a view on the sector, but are not willing to accept the single stock earnings risk of holding individual names, this is a great way to go. The options chain is liquid enough for you to get good fills. Aside from the fundamental factors, the technicals look good.  Rising RSI, rising PPO momentum, and price breaking out from a 3 1/2 month corrective trading range that was $8 wide. On a measured move basis the target is $80.   I like the play.  Subscribers got long Nov $73 calls yesterday.  If price loses the 20ema, the trade was wrong. 

$TLT – Bonds

$158 is a key spot for TLT and one you should alarm. It is key support.  THe narrative out in FinTwit land is that the cyclical recovery is coming as are higher rates.  If that’s true, being short TLT will pay phat. The problem is, every time price tags $158 TLT finds buyers. I am not in the predicting game so I am not going to offer a guess. What I do know fo’sho’ is that an impulsive break of $158 sends TLT to $152 and possibly lower if bond yields keep rising.  If we instead get a risk-off moment in equities, or we get covid-related economic problems, here come the TLT buyers.  Very objective and low-risk trade location for a stab at a long at massive lateral and 200ema support, or you wait for a break down below $158 and hit it short.  Set the alarm. No one on FinTwit will be reminding you about this one.

$LH – Lab Corp

“If it breaks the high, you gotta a buy”  Remember that one. A nice tight long against $202.50 looking for $220 – $225.   For fun, pull up the weekly or monthly chart of this one. We were at this level 2 years ago.  If the stock can hold / build upon the gains through the October close, it would have a monthly breakout and the upside would promise to be a lot more than $20. I like it long but dont forget, double check earnings.

$LGND – Ligand Pharma

Price at key support. A break and close below $87.50 opens the door to the March lows with not much to slow it down.  Price bounced off its initial tag of the level back in late September.  There are much higher odds of the level breaking on this second test.  I favor lower from here, but it’s got to break first. No Trigger no trade. 

$SCCO – So. Copper

One of the major copper producers, along with $FCX.  Falling Dollar and strong demand out of China has re-ignited copper as it looks for a bull leg higher.   $SCCO offers a nice, tight, long entry on the breakout from a well defined level.  RSI has a breakout working and although I’d like to see PPO a little stronger, you don’t always get what you want. Indicators remain favorable. Price has broken out. Get long against the breakout at $48.50.

$HALO

Breaking out from a well-defined $5 trading range. The measured move target is $35.  Get long against $29.50 with a stop just below and look for $35

$BE – Bloom Energy

Price executing the “give n go”.  Breakout, back-test, and go!! ( we hope ) …. it’s a classic technical move.   I like the idea of getting long the name against $17.50.  Price holding dual lateral and uptrend support.

GAP  / Bracket Trade Set ups

I am not going to post these charts, but these tickers all had sizable gaps that set up well for Bracket Trades

  • IBM / LOGI / CCK / NFLX / PXD

Pulling it all together

Lots of nice set up’s here for you to consider here.  All are objective and low-risk in my view.  Low risk meaning you can place a stop near by and you will know exactly when / if you’re wrong.  That doesn’t mean you go firing off 10 trades at the bell.  Be selective and consider your present holdings.  Market vol is high and with the election 2 weeks out probably not the best time to be maxed out on positions.  Only take trades you can manage well.

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