Sunday Setups - 3/10

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!

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) & /NQ (Nasdaq Futures)

This past week was a chop fest with a very wide range! Anytime we made a new high, the indices dropped quite a bit. We eeked out a new high in Monday’s session, and Tuesday was just an elevator down. It ended with a short covering rally, and seemed like the 21ema was buyable once again. That worked into Friday, which opened strong but gave up most of the gains by the end of the day.

What does this mean? For one, this is just normal market behavior. Buyers and sellers rebalancing portfolios based on their outlook. Though, I can’t help but take it as a sign that the bull market might be coming to a pause - at least for the next few months.

This is an election year, which tend to be bullish. So, I’m approaching the market with the view that we get more of the chop we saw this week, with some potential for downside. As I mentioned last week - I’m not going to sell everything and go short. I will take conservative entries, wait for strong setups, and likely take profits at the first target. We saw this week first hand, that gains can get taken away pretty quickly.

There are a few more signs that lead me to believe we may see chop / downside.

1. The indices have just about hit the 1.272% extensions from the swing-high to swing-low we saw in 2021.

   • The /ES extension was $5164 (this was reached)

   • The /NQ extension was $18,476 (NQ came just shy of it this week - close enough?)

2. The momentum oscillator on the weekly chart turned down (it went from bright blue to dark blue - highlighted in the lower part of the charts below), which means that the strong bullish moves we have seen may be slowing.

3. The put/call ratio remains low, which indicates that there may be downside ahead. I’ve mentioned this several times over the past few weeks, but a reset (increase) in this indicator would give me more confidence in being long.

The big news this coming week will be the CPI numbers (inflation) that come out Tuesday morning at 8:30am. Last time this happened, the numbers were slightly higher than expected, and we saw quite a bit of volatility.

This is because everyone is still trying to get a better understanding what what the Fed will do to interest rates this year. Lower inflation has been bullish and higher inflation has been bearish, as the Fed has signaled that they will lower rates when they are confident inflation is in check. Lower rates are beneficial for the growth names, in particular tech, as it enables more affordable investment in growth.

The name of the game is to have strong convictions, weakly held. I’ll let the market dictate where we go and not get married to one idea. I just outline all of this thinking to explain how I will be approaching the market.

So, I will continue to focus on good setups to the long side, but I may look to sell some call credit spreads on the SPX if we get a sell signal.

Alright, let’s get back to the main show. Here is what I’m trading this week.

This week’s Trade Ideas

1.) CYBR  Long

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: $250 - $260

• 8 ema (blue line in chart) down to the 34 ema (green line in chart)

• The current price is above the entry zone

• I’d prefer to enter at or below the 8 ema. Right now, I have entries priced at the 21 ema ($257)

Targets: $278 - $299

• T1: $278

• T2: $299

  • All of these are based on fibonacci clusters from prior swings

CYBR 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 70, 41 Days to Expiration, $250 Strike)

• Entry: BUY +1 CYBR 100 19 APR 24 250 CALL @18.50 LMT

• Exit T1: SELL -1 CYBR 100 19 APR 24 250 CALL @31.00 LMT

• Exit T2: SELL -1 CYBR 100 19 APR 24 250 CALL @50.00 LMT

Long Call Debit Spread (Buying $280 & Selling $300 strikes, 41 Days to Expiration)

• Entry: BUY +1 VERTICAL CYBR 100 19 APR 24 280/300 CALL @4.20 LMT

• Exit T1: SELL -1 VERTICAL CYBR 100 19 APR 24 280/300 CALL @8.50 LMT

• Exit T2: SELL -1 VERTICAL CYBR 100 19 APR 24 280/300 CALL @12.00 LMT

2.) RRR  Long

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: $56 - $57.2

• 8 ema down to the 34 ema (green line in chart)

• The current price is in the entry zone. Entries are priced at current levels.

Targets: $62

• T1: $62

  • This is based on fibonacci clusters from prior swings

RRR 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 72, 54 Days to Expiration, $540 Strike)

• Entry: BUY +1 RRR 100 19 APR 24 54 CALL @4.60 LMT

• Exit T1: SELL -1 RRR 100 19 APR 24 54 CALL @8.20 LMT

Sell Put Credit Spread (Selling $59 & Buying $54 strikes, 40 Days to Expiration)

• Entry: SELL -1 VERTICAL RRR 100 19 APR 24 59/54 PUT @2.10 LMT

• Exit T1: BUY +1 VERTICAL RRR 100 19 APR 24 59/54 PUT @.80 LMT

3.) PSX  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.

• I like that it was green on Friday, despite the overall market volatility.

My Levels:

Entry Zone: $143 - $147

• 8 ema (blue line in chart) down to the 34 ema (green line in chart)

• The current price is above the entry zone. Entries are priced at $147

Targets: $155 - $168

• T1: $155

• T2: $168

  • All of these are based on fibonacci clusters from prior swings, but I will take most off at T1.

PSX 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 75, 40 Days to Expiration, $140 Strike)

• Entry: BUY +1 PSX 100 19 APR 24 140 CALL @10.60 LMT

• Exit T1: SELL -1 PSX 100 19 APR 24 140 CALL @16.00 LMT

• Exit T2: SELL -1 PSX 100 19 APR 24 140 CALL @28.00 LMT

Long Call Debit Spread (Buying $420 & Selling $450 strikes, 40 Days to Expiration)

• Entry: BUY +1 VERTICAL PSX 100 19 APR 24 145/155 CALL @4.50 LMT

• Exit T1: SELL -1 VERTICAL PSX 100 19 APR 24 145/155 CALL @6.75 LMT

  • I will take all of these off, if I get T1. The risk/reward does not make sense to hold for higher prices. Typically 70% the width of the spread is a good target for call debit spreads.

5.) Others I’m Watching  Long

INTU

• This is currently in the buy zone - will look for a 60-70 delta call to target $700 (40+ days to expiry)

WMS

• This is also in the buy zone - will look for a 60-70 delta call to target $172 (40+ days to expiry)

KKR

• This is not yet in the buy zone - will look for a 60-70 delta call to target $103 & 109 (40+ days to expiry)

ARES

• This is right at the top of the buy zone - will look for a 60-70 delta call to target $142 & $149 (40+ days to expiry)

COOP

• This is right at the top of the buy zone - will look for a 60-70 delta call to target $79 (40+ days to expiry)

I’ll keep you posted on any trades I take!

Open Trades Review

Week of 1/28 Trade Ideas (CLOSED)

• PVH (CLOSED)

  • Didn’t get $147, but got up to $137.5 and took profits. Flat PVH, as these were nearing expiration. Solid trade!

Week of 2/4 Trade Ideas

• GS (2/5 entry)

  • We still have time on this with the April series, but I’m starting to lose patience on this….which hopefully means it will start moving soon ;-). Holding full position - setup still in tact.

• CARR (CLOSED)

  • Got follow through to $60 - exited full position. Solid trade!

Week of 2/11 Trade Ideas

• LEN (CLOSED)

  • Got T2: $163 - took profits. Flat LEN. Great trade!

• ACM (2/13 entry)

  • Solid move into the end of the week - looking for follow through early this week. These expire next week, so will look to take off Monday or Tuesday. Holding full position.

• IT (CLOSED)

  • Took these off Wednesday, as we were running out of time - expire next week. Not the big targets I was looking for, but still nearly 50% on the trade!

Week of 2/18 Trade Ideas

• ISRG (CLOSED)

  • Took this all off at $401. Have a lot of positions on, wanted to limit risk in case the indices decide to pull back, and they expire soon. This is a more volatile name. Solid trade!

• JEF (2/21 entry)

  • T1 of $43 was hit. Took off 1/3rd of the position. Holding the rest to see if we get follow through to $45. This has been a steady riser.

Week of 2/25 Trade Ideas

• ORLY (2/27 entry)

  • Solid progress - looks great. Holding full position.

• ROP (2/26 entry)

  • A bit whippy, but setup still in tact. Holding full position.

• MSFT (2/27 entry)

  • Looks great - back in a daily squeeze and waiting for it to fire. Holding full position.

Week of 3/3 Trade Ideas

• HCA (3/4 entry - CLOSED)

  • Nice quick trade. Solid win! Entered 3/4 and targets were hit on 3/6 ($323) and 3/8 (328).

• BECN (3/4 entry)

  • Good entry near the 21 EMA - waiting for setup to play out. Holding full position.

• MPC (3/4 entry)

  • More aggressive entry near the 8 EMA, but the weekly squeeze keeps pushing this one. Took off half at $180 - holding the rest for $195, if we can get it.

That’s it, that’s all. Let me know what you thought of this week’s Sunday Setups!