There are really only two stocks that you need to be watching to understand where markets are heading.
I’ll get to them shortly.
First up, I’ve started to trade the open again as the market is presenting nice opportunities. I’ve always enjoyed trading the open.
I’ll be focused on $431.85 for SPY which was the high from two Fridays ago.
Monday SPY moved above this level, tested it right at the close and moved higher.
Two trade set ups that I’ll be watching for.
For upside, I’m looking for a retest of 431.85 and bounce, taking entry on the move up off of this level. I like considering the 433/434 strike calls, same day expiration.
If you prefer to slow down the price action a little, move the expiration date out and test which duration works best for your style of trading.
For a downside trade, I’m looking for a drop below the 431.85 level. If SPY attempts to break back above but gets rejected I like taking a short position.
For this trade, I like considering the 429 strike puts expiring the same day.
These are hyper quick trades that I am in and out of in a matter of minutes. Occasionally for a couple of hours.
I like using a 15% stop loss and focus on taking the best possible entries.
I also like taking profits on an initial move, leaving about half of the position on for additional run.
Ok now let’s talk about the two key stocks to watch and why.
META
After back to back days of big moves up, META finds itself above the high from just 3 weeks ago and targeting $326.20 next.
If shares push above this target level I expect a retest (as usual) and continuation higher.
You can see a very nice bounce off of the 50-day and 20-day moving averages which both fell at about the same level.
At this same spot there is also a volume shelf which provided support.
If META gets moving I like the odds of the overall market following along.
GOOGL
Shares of GOOGL reached $139.16 in September and nearly got their again Monday.
A break above this level will get investors and traders attention. A race to $150 could be in the cards for GOOGL.
Interested to see if $136.50 is tested and can hold. If it does I think 139.16 will be taken out quickly.
If both META and GOOGL can make these moves higher, I like a Q4 rally for both the S&P500 and NASDAQ.
Tech will be all the rage again.
Thanks for tuning in! I appreciate your support of A Trader’s Education and hope you have a great day!
If you enjoy the podcast, be sure to watch live every Sunday on YouTube where I host The Trading Triangle with friends Shaun and Kaye.
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This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
SPY Levels & the Two Most Important Stocks