Sunday Setups - 3/24

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)

Another week, another all-time high!

We saw a dip to the 34ema in the /NQ and a dip to the 21ema in the /ES, with triple witching expiration last friday, and then saw a strong retracement rally Monday. All eyes were on the FOMC rate decision and Powell press conference. Once the expectations were confirmed, equities continued higher to all time highs. The bullish trend continues to be extremely strong.

We still have a daily squeeze on /NQ that is looking to fire (fired on continuous /NQ and about to fire on current contract /NQM24), so I’ll keep looking higher for now.

The dip to the 34ema gave us a bit of a reset. We also saw a few spikes in the put/call ratio that lead me to continue to lean bullish.

As you can see in the image above, when the put/call ratio spiked above 0.8, equities rallied. We saw a reading of 0.84 on Friday, so I’m looking for continuation higher.

While I am not heavily trading the indices directly, this creates an environment where I can continue to buy dips on upward trending stocks, with entries near the 8 or 21 emas.

The mag 7 group of stocks, which continue to drive the trend of this market, also looked poised for higher prices, with most of them showing a bullish trend: stacked exponential moving averages (8ema > 21ema > 34 ema) & daily squeezes.

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

This week’s Trade Ideas

1.) AMZN  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: $172 - $177

• 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 between the 8 & 21 EMAs ($176)

Targets: $185 - $190

• T1: $185

• T2: $190

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

  • potential for higher prices, if there is a new high, but I’m being slightly conservative here

AMZN 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 62, 55 Days to Expiration, $175 Strike)

• Entry: BUY +1 AMZN 100 17 MAY 24 175 CALL @10.25 LMT

• Exit T1: SELL -1 AMZN 100 17 MAY 24 175 CALL @14.75 LMT

• Exit T2: SELL -1 AMZN 100 17 MAY 24 175 CALL @18.50 LMT

2.) UBER  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: $75.7 - $78.6

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

• The current price is above the entry zone. Entries are priced at $78 (near the 21 EMA)

Targets: $85 - 90

• T1: $85

• T2: $90

  • This is based on fibonacci clusters from prior swings

UBER 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, 55 Days to Expiration, $75 Strike)

• Entry: BUY +1 UBER 100 17 MAY 24 75 CALL @7.30 LMT

• Exit T1: SELL -1 UBER 100 17 MAY 24 75 CALL @11.75 LMT

• Exit T2: SELL -1 UBER 100 17 MAY 24 75 CALL @16.00 LMT

3.) LLY  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: $810 - $830

• T1: $810

• T2: $820

• T3: $830

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

LLY 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 Call Debit Spread (Buying $800 & Selling $830 strikes, 40 Days to Expiration)

• Entry: BUY +1 VERTICAL LLY 100 17 MAY 24 800/830 CALL @8.50 LMT

• Exit T1: SELL -1 VERTICAL LLY 100 17 MAY 24 800/830 CALL @14.00 LMT

• Exit T2: SELL -1 VERTICAL LLY 100 17 MAY 24 800/830 CALL @15.00 LMT

• Exit T3: SELL -1 VERTICAL LLY 100 17 MAY 24 800/830 CALL @17.00 LMT

  • I will take all of these off, if I get T1 soon. The increase in price beyond that is not significant, unless we get decay from time passing. Typically 50% - 70% the width of the spread is a good target for call debit spreads.

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

Open Trades Review

Week of 2/4 Trade Ideas (CLOSED)

• GS (CLOSED)

  • Patience pays! This finally moved - hit both targets at $407 and $414. Despite the theta decay we had to put up with, these ended up 100% gains. Great trade!

Week of 2/18 Trade Ideas (CLOSED)

• JEF (CLOSED)

  • Closed the other 2/3rds of this position out this past week, as we got $44 and $45.50. Great trade!

Week of 2/25 Trade Ideas

• ROP (2/26 entry)

  • Still consolidating - waiting for the setup to play out. Could this be the week? Holding full position, but will cut loose if we get a close below the 34 EMA, as we are running out of time on these.

• MSFT (2/27 entry)

  • Took off 1/3rd at $424 two weeks ago. Still holding the rest for higher targets at $434 & $448. Still looks good.

Week of 3/3 Trade Ideas

• BECN (3/4 entry)

  • Took off 1/3rd at $92 and another 1/3rd at $94. Holding the rest for $100. Great looking chart.

Week of 3/10 Trade Ideas

• CYBR (3/11 entry)

  • Still holding half position, looking for $299

• RRR (3/12 entry)

  • Still holding - regained the EMAs, so still like the setup.

• PSX (3/11 entry)

  • Will be get $168 or is $160 all she wrote. Holding to find out this week - like the setup.

Week of 3/17 Trade Ideas (CLOSED)

• COOP (3/18 entry - CLOSED)

  • Solid entry at the 21 EMA. Took it off at $78 - nice quick trade!

• WMS (3/18 entry - CLOSED)

  • Solid entry at the 8 EMA. Took it off at $174 - another nice quick trade!

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