Trading Prep DEEP DIVE October 31, 2020

Welcome to the Weekly Game Plan! The 'MARA Lists' are updated in real-time. The 'Market Summary' is provided weekly. The 'Deep Dive Video' is the recording of our weekly Trading Prep DEEP DIVE.

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The market shifted gears last week as it established downtrends on both the weekly and daily time frames. HOWEVER, what I feel is more interesting than what it did is where it’s at right now. Across the board, each of the major indexes are sitting on some kind of a major support level, be it structual like the S&P 500, a 100ema like the NASDAQ and Russell 2000 or a 200sma like the NYSE and Dow.
With the swift down move last week, unless if the market completely crumbles, I feel as though most of the meat is already off the bone for the shorts. During the deep dive we were assessing a move in SPXS at Ollie’s request. This is a triple leverage reverse ETF of the S&P. So when the S&P drops, this thing moves 3x to the upside. Sounds like a good deal BUT it also swings 3x in the other direction as well. The point being, if the S&P drops to the 200sma, there’s only a 1.5:1 reward to risk and that’s using an entry equal to Friday’s close and a stop at the high of the gap down. Is the juice worth the squeeze? …we all need to answer that for ourselves. For me the answer is no on the short side.
I am seeing a handful of VERY INTERESTING long ideas. QDEL scored a 9.27 on the Trade Gauntlet. Highest I’ve seen so far. JD scored an 8.02, super high. MPWR and SAM both scored in the 7.5 range. My point in sharing this is that despite a 10% correction on the indexes, there are some very constructive setups and the relative strength on these are off the charts. It’s worth paying attention to. 

OVERALL DIRECTION: SDD (sideways on monthly, down on weekly and daily time frames)

NEW HIGHS vs NEW LOWS: Super interesting to see all 5 major indexes make lower lows on Friday and the number of stocks hitting new lows dry up. I feel as though this divergence is hinting at a bounce…or at least some of the constructive action I’m seeing in leading stocks. We’ll have to see what plays out.




PORTFOLIO MANAGEMENT: With 4 names scoring extremely high on the gauntlet this week, its hard for me to not to want to dive in on all of them. I already have a position in JD. I still really like the setup. If it breaks out again, I’ll add 0.5% back into it.

I’m also looking to add half positions on QDEL, SAM, and MPWR if they break out. 

Seems like I’m taking on a lot of risk. In reality, I’m putting on 2% of capital risk if these names break out.  



There’s 4 highly rated stocks this week and they’re all on the action list. I’m actually surprised to see setups scoring this high while the market is correcting. If all 4 trigger, I’ll be adding 2% capital risk. 

Here’s the link to this week’s notes: https://docs.google.com/spreadsheets/d/1ybgEYFh-ux-SfOWRCzwEnEzqVNOiG9_ADA8X-R1tKB4/edit?usp=sharing

A couple of notes on the sheet:

  1. We’ve added ‘TRADE GAUNTLET NOTES’. This will show you all of the criteria the idea met! Roll over the cell and to see this notes box.
  2. The ‘notes and game plans’ cell was getting too long so I tightened the cell. To see all the info, double click the cell. 



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