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- Sunday Setups - 2/11
Sunday Setups - 2/11
How high can we go? Still a lot of really solid charts out there.
Happy Sunday,
To make your Monday more enjoyable, we’ve prepared some Fresh Trade Ideas for you. They go nicely with a freshly squeezed glass of lemonade!
What is the Sunday Lemonade?
It’s a short review of trades from last week and a detailed overview of trade ideas for this week. Build your trading strategy for the week in the time it takes to finish a glass of lemonade.
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Alright, is that sugar kicking in? Let’s find some edge!
Quick Summary
This week’s Trade Ideas
Market Review
Before we dive in to the individual trades that I am looking to take, I want to do a quick review of where the markets stand. Understanding the overall market trend will help guide us with how we approach these trades.
/ES (S&P Futures)
We got $5,000, and it didn’t take very long to surpass that and close above it. The trend remains bullish.
/ES Weekly Chart
At the risk of sounding like a broken record, there is some risk to the downside, based on the Put/Call Ratio. When the 10 day simple moving average of the Put/Call Ratio gets below 0.8, the probability of a pull-back increases. You can see this in action in the chart below. Top of the chart is the Put/Call Ratio, the purple line is the 10 day sma, & the bottom chart is the S&P Futures. I put a box around the areas where this came to fruition. It is not a perfect science, but it does give us a guide for how to approach the market.
Put/Call Ratio vs /ES futures chart
The big question is “how do we trade this information?” Well, in short, we focus on strong names with good setups, and we are more conservative with our entries - meaning, we enter closer to the 21ema instead of chasing momentum.
If we get a break of the low that stands with the high bar, I might look to sell some SPX call debit spreads. Not a perfect sell signal, but an indication we might get a reversion to the mean (21 ema). I’m not looking for much more than that right now, but we’ll let price action be our guide. If we get a close below the 21ema, I’ll begin to focus on the short side.
Right now, that level is $5,013.
Alright, let’s get back to the main show. Here is what I’m trading this week.
1.) LEN Long
Daily Chart Setup
Reasoning:
Bullish Trend (8 ema > 21 ema > 34 ema); trading with the trend
Daily Squeeze with positive momentum, which means a higher probability of making a larger move.
Near all-time highs, so less resistance overhead.
My Levels:
Entry Zone: $148 - $153
Current price to the 34 ema (green line in chart)
The current price is in the entry zone, as it is near the 8 ema
Targets: $160 - $163
T1: $160
T2: $163
All of these are based on fibonacci clusters from prior swings
LEN Options Strategies
**reminder: exits are theoretically priced two weeks out, but the price of the underlying is the primary trigger for taking the trade off.
Long Calls (Delta 61, 33 Days to Expiration, $150 Strike)
Entry: BUY +1 LEN 100 15 MAR 24 150 CALL @8.30 LMT
Exit T1: SELL -1 LEN 100 15 MAR 24 155 CALL @8.20 LMT
Exit T2: SELL -1 LEN 100 15 MAR 24 150 CALL @14.40 LMT
Long Call Debit Spread (Buying $155 & Selling $165 strikes, 33 Days to Expiration)
Entry: BUY +1 VERTICAL LEN 100 15 MAR 24 155/165 CALL @3.40 LMT
Exit T1: SELL -1 VERTICAL LEN 100 15 MAR 24 155/165 CALL @5.00 LMT
Exit T2: SELL -1 VERTICAL LEN 100 15 MAR 24 155/165 CALL @6.00 LMT
2.) IT Long
Daily Chart Setup
Reasoning:
Bullish Trend (8 ema > 21 ema > 34 ema); trading with the trend
Daily Squeeze, which means a higher probability of making a larger move.
Near all-time highs, so less overhead resistance
My Levels:
Entry Zone: $453 - $461
8 ema down to the 34 ema (green line in chart)
The current price is above the entry zone, so will look to enter if we get a dip below the 8 ema. Entries are priced at $461.
Targets: $482 - $497
T1: $482
T2: $497
All of these are based on fibonacci clusters from prior swings
IT Options Strategies
**reminder: exits are theoretically priced two weeks out, but the price of the underlying is the primary trigger for taking the trade off.
Long Calls (Delta 71, 33 Days to Expiration, $450 Strike)
Entry: BUY +1 IT 100 15 MAR 24 450 CALL @19.50 LMT
Exit T1: SELL -1 IT 100 15 MAR 24 450 CALL @34.50 LMT
Exit T2: SELL -1 IT 100 15 MAR 24 450 CALL @48.00 LMT
Long Call Debit Spread (Buying $130 & Selling $140 strikes, 34 Days to Expiration)
Entry: BUY +1 VERTICAL IT 100 15 MAR 24 480/500 CALL @3.15 LMT
Exit T1: SELL -1 VERTICAL IT 100 15 MAR 24 480/500 CALL @7.20 LMT
Exit T2: SELL -1 VERTICAL IT 100 15 MAR 24 480/500 CALL @12.00 LMT
3.) ACM Long
Reasoning:
Daily Squeeze with positive momentum, which means a higher probability of making a larger move.
Near all-time highs, so less overhead resistance.
My Levels:
Entry Zone: $89 - $89.50
Current price down to the cluster of 8,21,34 ema
The current price is in the entry zone - entries priced at $89.50
Targets: $96 - $102
T1: $96
T2: $99
T3: $102
All of these are based on fibonacci clusters from prior swings
ACM Options Strategies
**reminder: exits are theoretically priced two weeks out, but the price of the underlying is the primary trigger for taking the trade off.
Long Calls (Delta 77, 33 Days to Expiration, $85 Strike)
Entry: BUY +1 ACM 100 15 MAR 24 85 CALL @5.90 LMT
Exit T1: SELL -1 ACM 100 15 MAR 24 85 CALL @11.30 LMT
Exit T2: SELL -1 ACM 100 15 MAR 24 85 CALL @14.20 LMT
Exit T3: SELL -1 ACM 100 15 MAR 24 85 CALL @17.20 LMT
Long OTM Calls (Delta 50, 33 Days to Expiration, $90 Strike)
This is a cheaper option, similar to a call debit spread. However, there is effectively no bid on the $100 strike, so it would not offset our price we’re paying for the $90 strike. If I enter, and price increases, could consider selling $100 calls against the long $90s, to hedge against theta decay.
Entry: BUY +1 ACM 100 15 MAR 24 90 CALL @2.15 LMT
Exit T1: SELL -1 ACM 100 15 MAR 24 90 CALL @6.40 LMT
Exit T2: SELL -1 ACM 100 15 MAR 24 90 CALL @9.30 LMT
Exit T3: SELL -1 ACM 100 15 MAR 24 90 CALL @12.20 LMT
4.) Others I’ll Be Watching Long
SIG
SIG Daily Chart Setup
RPM
RPM Daily Chart Setup
META
META Hourly Chart Setup
Reasoning:
Bullish Trend (8 ema > 21 ema > 34 ema); trading with the trend
Daily Squeeze, which means a higher probability of making a larger move.
Within 10% of all-time highs - so, less resistance overhead
There will likely be a few more alerts this week, as there are a lot of setups that fit into my trading plan. I’ll keep you posted!
Open Trades Review
Week of 1/14 Trade Ideas
OC (CLOSED)
Closed out the remaining 2/3rds at the end of the day Friday, as it was set to close below the 34 EMA. Normally, I would see if we get a second close below the 34 EMA to stop it out, but earnings are in 3 days. I won’t hold through earnings, so I figured I would just take the risk off the table. 1/3rd position with 100% profit and 2/3rds at breakeven - I’ll take it.
H (1/16 entry)
Still holding - we’re just below breakeven. Chart pattern still looks good. Nothing has changed, but I will look to take this off before they expire.
KKR (CLOSED)
Closed the last 1/3rd at $95. Solid win. Flat KKR.
Week of 1/21 Trade Ideas
BLK (1/16 entry)
Still holding. Not much to salvage here, so either will let expire worthless or this squeeze finally fires this week. Not going to roll out.
Week of 1/28 Trade Ideas
UHS (1/29 entry)
Still holding 2/3rds position, looking for $170 next. Earnings are on 2/28, so will take of before then regardless.
PVH (1/31 entry)
$128 was hit, but daily squeeze has not fired long yet, so holding full position into this week to see if we get some follow through. Chart still looks good.
CSX (1/29 entry)
T1 was hit at $37. Took off 1/3rd of my position. Holding the other 2/3rds with a target of $40.
Week of 2/4 Trade Ideas
GS (2/5 entry)
Good entry, but no targets hit yet. Still holding - chart looks good, and nothing has changed. Just taking it’s time.
FERG (2/5 entry)
T1: $197 was hit this week, and we came $0.50 shy of T2: $200. I took 2/3rds off at these levels. Holding 1/3rd to see if we can get up to that third target at $208.
CARR (2/6 entry)
Gave us a little heat after earnings, but it’s back above the emas. If we get one close below them, I will exit. These were cheaper entries with time, so willing to give them a bit of room.
That’s it, that’s all. Let me know what you thought of this week’s Sunday Setups!