Weekend Profit Navigator May 10

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The Weekend Profit Navigator provides a big picture stock market analysis for the week just past with a look ahead. Key levels and trading locations for the indexes are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Money Management and the Aspiring Trader

If you ask people heading to Vegas for a vacation how they handle their money and you’ll most commonly you’ll get variations on this theme. ” I pay for my airfare, hotel, shows, and excursions all up front. Then for my gambling money, I take cash and if I lose it all, I will at least have had a good time and not gone over my limit.” .   Seems like a reasonable plan.  You wont find many respondents saying ” I plan to take my life savings to Vegas”. If you did, you’d call them irresponsible.   Yet when it comes to aspiring traders, I’d venture a guess that at least 80-90% of respondents would say that they funded their trading account with their entire savings nest egg. Would you call that responsible, irresponsible, or just plain dumb?  Make no mistake folks, The market is Vegas.  You may lose spectacularly quickly, or maybe slowly over time but everyone loses. The trick is to learn something while you’re losing, then still have monies left to trade with your new-found knowledge.

If you’re new to trading, protect your money from yourself.  Only trade with what you can afford to lose, just like your Vegas vacation.  Fund your account in 4 tranches of 25% each.  Set milestones to receive the next tranche. If you lose the initial 25%, create a plan on how you plan to trade the market with the next 25%.  Be sure to trade small and with a defensive mindset to protect your precious assets.  Once you’re out of funds, you can no longer play the game.  Remember that.


Most of the heavy hitters have reported and we are on the downside of the earnings mountain. That said there will continue to be lots of earnings induced gaps and second day plays to take advantage of for those interested.

The Brokers report record new account sign-ups and activity.

The daily active revenue traders ( DARTs ) have exploded this year as zero commissions have prompted millions of retail traders to open new accounts. Robinhood alone added 3 million accounts in Q1. The other brokers report record sign ups as well. ( Chart courtesy of Cam Hui ) .  It reminds me of 1999. Every time I’d call someone for my business, they were in the middle of a day trade. It also reminds me of 2004-2005. I’d call up sales reps in my industry and was often told they quit to become a real estate agent. It is fine to participate in a bubble market and make as much as you can, just recognize what it is. In the trading room we’ve marveled at Wayfair $W.    7 weeks ago it was $21; now its $180 and at All time highs.  Nothing has changed; still losing money.  Just pissed I’m not in it!!


The Oscillators

NYMO and NAMO both advanced on Friday as you’d expect on a green day. Both are nearing overbought ranges but nothing like the extremes we’ve seen in recent weeks. Both have room to go higher before the alarm bells start to go off.  Keep an eye on these during the week. If you start seeing readings in excess of 80 you can almost be assured a pull back is coming soon. Reminder. These readings are only available at the end of the day. Check them at the conclusion of the session for updates.

Charts in Focus

These are charts that offer either immediately actionable trades or compelling set up’s to alarm that are near actionable. What I like to do is set a bunch of alarms, then as they trigger, refocus attention on the name in the context of other positions / trades I may have on and the level of exposure I have.  I dont take every trade that triggers but that in no way means that it is not a good trade to take.  I suggest you set alarms and treat them the same way.  Better to pass on a trade you’re aware of than to never have the opportunity to make that choice.

Please double check the earnings date before initiating any trades


Trade Web taking out the prior high with blue sky overhead. I like this long against $56.


We alarmed this name a little over a week ago as a long idea on a break above the 50ema and $20. It’s taken its sweet time, but is still poised to break out. What I really like about the set up is the $6 price void above. Price should move quickly once above $20.  Get long on a break above $20.


This one triggered a long entry on Friday with a break above $75. While I’d have liked a more decisive candle, I still like it long against $75. Earnings are on Jun 2 and I like the chances of a pre-earnings run. We’re in the Jun 77.5 calls.  Still like the trade if you’re not in.


We set this up as a bracket trade after the gap up on Thursday. It triggered a long entry Friday on a move above $176.37. Still like it long against $176.37.


Here is another bracket trade set up. Get long on a move above 147.20. If price fails to hold the gap at 139.28 it favors a move to fill the $10 gap to 128.31.


Price triggered a long entry Friday as it took out the all time high on this relatively new issue.  I like it long against $34.


Large Cap bio’s have been consolidating after it’s recent breakout. Alarm $129 for the next leg higher. If you get the break out stay long against $128. If the trade advances as planned you can either trail a stop up or use the rising 8ema as a stop. Note: If you look at a weekly chart, IBB has been in a $22 wide consolidation for 2 years between $122 – $100. The projected measured move is $144 for this leg higher. That is your T1.


The small cap bio’s have also been doing well and actually have been outperforming large cap bio’s on a relative basis. Price is now breaking out above the recent range. I like XBI long against 98 with a stop somewhat below based on your risk tolerance. Note: The all time high of 101 was posted a little over 2 years ago. Conservative traders could alarm that level for a long entry for an extra measure of safety and buy the all -time high. Either way, I like this one long.


ULTA is breaking back into its value range between $225 – $315. Price is above all the moving averages except the 200ema. I like this long here with a target of $250. Above $250 not much stopping it to $300. A more conservative approach would be to alarm the 200ema at $250. Make price prove it can take it out. If so, get long against the 200ema and then look to 300-310 as your target.


Price is moving into a $4 gap between $17 – $21. There is resistance at $18. If price can clear $18 I like this long with a target of $21. The 50ema is at $17 and should provide solid support on any pull back / hesitation.

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