WEEKLY GAME PLAN February 20, 2021

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.
Market Summary


Another week in the books and another week that I’m reminded of Jesse Livermore’s famous quote “It was never my thinking… it was always my sitting and waiting.” I don’t think Jesse keeping his eyes closed or burying his head in the sand. I think he was talking about adhering to his plan, his trading rules, and allowing it to play itself out.

This week saw some more wild swings in the stocks we’re trading. Headlines are talking more about ‘market froth’. When we buy into those narratives, or any narrative for that matter, we’re taking our eyes off the market and what is actually happening. It becomes easy then for emotions like fear to begin mascerading as conservative wisdom, causing us to aggressively roll up stops and then see trades continue higher without us.

Rules are set, strategies are made, and risk is managed BEFORE trades are placed. A big part of trading well is allowing the plans we’ve set to play themselves out.

This week, we have a market that is up and the monthly time frames, up on the weekly time frames, and sideways on the daily time frames. There are nearby levels of support on the daily time frames (see charts below).

The number of stocks making new highs vs new lows remains robust. New highs continued to hit triple digits and new lows remain virtually non-existant. I’m seeing this as a sign of continued breadth and participation in the rally.

We’re also seeing stocks continue to make fresh setups. We had about 40 ideas out of the 300 stocks (yes, the universe list increased substantially this week) setting up. That’s substantial. We also have 11 of them making it onto the focus list. With so many good looking setups, opportunities are plentiful.

All that said, we always need to be prepared for the opposite side of the trade. This is where setting aggressive stops can get you kicked out of trades prematurely. I always prefer stops to be set below price structure that lines up on both daily and weekly charts. Running ideas through the Trade Gauntlet helps make sure that the ideas are robust.

We also want to be mindful of ‘portfolio heat’, the total amount of risk we’re exposed to. Think about what would happen if you were stopped out of every position you have. How much of a drawdown would that be? Are you comfortable with that number? Sure if that happens it wouldn’t be nice but are you comfortable if it happens once in a year (about a 2% chance annually)? Think about it. It’s unlikely but its a card in the deck and we need to prepare for it. The more prepared you are, the less fear you’ll have and will be able to sit and follow your plans.

Checkout the charts of the indexes below for a closer look at the action.

MONTHLY CHARTS (indexes) Overcall Direction = Up: https://www.tradingview.com/x/02vproF0/?aff_id=15325&offer_id=10

WEEKLY CHARTS (indexes) Overcall Direction = Up: https://www.tradingview.com/x/xL0CAM5v/?aff_id=15325&offer_id=10

DAILY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/NAxysfLR/?aff_id=15325&offer_id=10
(on the lower right is the image of stocks hitting new highs vs new lows on the NASDAQ & NYSE)

Deep Dive Video

DISCLAIMER: Futures, stocks, and options trading involves a substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks, and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. The highly leveraged nature of futures trading means that small market movements will have a great impact on your trading account and this can work against you, leading to large losses, or can work for you, leading to large gains.
If the market moves against you, you may sustain a total loss greater than the amount you deposited into your account. You are responsible for all the risks and financial resources you use and for the chosen trading system. You should not engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. If you do not fully understand these risks you must seek independent advice from your financial advisor.
All trading strategies are used at your own risk.
Any content on marawealth.com should not be relied upon as advice or construed as providing recommendations of any kind. It is your responsibility to confirm and decide which trades to make. Trade only with risk capital; that is, trade with money that, if lost, will not adversely impact your lifestyle and your ability to meet your financial obligations. Past results are no indication of future performance. In no event should the content of this correspondence be construed as an express or implied promise or guarantee.
marawealth.com or Mara Wealth LLC. is not responsible for any losses incurred as a result of using any of our trading strategies. Loss-limiting strategies such as stop-loss orders may not be effective because market conditions or technological issues may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as โ€œspreadโ€ or โ€œstraddleโ€ trades may be just as risky as simple long and short positions. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.