Watchlist 17th March 2022

Finally we can return to trading. For the last 3-4 weeks, ever since the invasion of Ukraine and the lead up to the fed meeting, the market conditions for swing traders has been terrible. With many names too extended to the downside and consolidation too short, with barely any names showing strength or consolidation to the upside to long.

The market has been reacting on every news headline and tweet, making it impossible to get positioned.

However, we’re now moving out of this thanks to all the bad/good news being published. We’re aware there is a war going on, potential shortages of some commodities, higher energy costs, higher inflation, higher interest rates, the list goes on. Which means there is far less to surprise us and therefore far less too wick us out or experience heavy gap downs from.

So now I’m going to be blunt, I couldn’t give a fuck if QQQ and the S&p 500 pull back, rip or chop for two years. All I care about is finding the strong sectors and names within those sectors that are trying to break out. When they do Ill be buying said breakouts. This also means, rightfully so, that I’ll be back to not really caring what Walter Bloomberg or any other market pulse distributor has too say on a 15 minute basis.

I’m back to risk on, back to looking for breakouts and ready to trade.

So before we begin I would like to take the time to remind everybody on strategy.

If you take 10 A+ breakouts, defined by high quality set ups, in high quality names, with great fundamentals and great relative volume it’s likely 3-4 will fail.

If you take all 10, as you should and 4 fail and 6 win here are your results. For this example I’ll remain super conservative and say the winners produce an average of 3 Rs. Risking 2% per trade.

Total Wins: +30 % account gain

Total Losses: – 8% account gain

Total account gain: +22%

That’s with a hit rate of just 60% and terrible continuation on said names.

Now I think we can all agree that an A+ trade is an A+ trade. It would be impossible for you to decide which of those 4 will fail. So why do most traders, even good traders, try to pick one of the 6 which will win and then proceed to oversize. If you took all 10 you’re practically guaranteed to earn a profit (or as close to a guarantee as possible).

If you just take one as it’s “your favourite” you run the risk of opportunity cost and have a far greater chance of being wrong, every single week.

Even if you pick the winner, then over size and risk 6% of your account, not 2% but fucking 6 and that trade produces 3 Rs like the example above. You’re only up 18% account gain by taking on 3 times the risk and with an increased change of picking a losing name. That puts you at a lesser gain than the person taking all the good trades who’s chilling and less likely to micro manage anything.

Over sizing will often lead too far greater risk and far worse results.

Right, now time for the list:

$TSLA – Beautiful daily flag formation against the 200ma which it’s attempting to break pre market. A push over the 200 and I’ll be taking entry risking low of the day.

$F – Very strong in comparison to the rest of the market this last week. It’s tried to hold the $16 range extremely well and was a big runner up until recent events. I would like to take a position over the 200ma risking LOD.

$SOXL – This may need a breather for a day or two however if we’re super strong again today and break the $36.50 with ease I’ll attempt to get involved risking LOD. This would however require far greater market conditions to actually work out.

$COST – Super strong consumer staple that never even tested the 200ma, extreme relative strength. Nice daily flag which looks ready to move, main area to watch is over $550 risking LOD.

$UNP – A spot by Jimmy and a good one at that, this thing is A+ technical with good relative strength, clean ATH daily formation in a strong sector.

$APPS – Very strong move yesterday and reclaim of the 10ma, the fundamentals and growth rates on this name are ludicrous, some of the best I’ve seen. will be looking for a retest of the 10ma followed by a break of HOD.

$AVGO – Very strong agains the market especially when all over semis tanked and flushed through. Nice 6 week daily flag which it just started to break out over yesterday. Will be looking for an entry at opening range highs risking LOD.

$FB – Jacks favourite name, rumour has it he has Mark Zuckenberg bed sheets. Finally we’ve seen a clean break of the 10ma for the first time since earnings gap down. It also found a tremendous amount of support below the $190 level. I’ll be looking for continuation by a break of yesterdays HOD risking LOD. Ideally we pull back at open to provide a range.

$AAPL – Needs no real introduction and once again, like clock work, we’re bouncing off the 200ma. Today we’ll be testing the downtrend and if we break through I’ll be grabbing a position risking around 0.5 ADR. I want to give this plenty of room for a potential move back over ATH in the coming weeks.

$DIS – Super strong double bottom, nice growth numbers, a strong re opening play with great prospects for its already successful streaming service. Respects the 10ma really well so a break and hold back above could see a trend for weeks. If we move at open I’d be happy to enter risking yesterdays low or LOD if we swipe at open.

$ACLS – Insanely strong company with great growth numbers, the weekly chart is also unbelievable. Looking for a break of $72.50 risking LOD, I’d prefer this to flag for a few days first but just getting on watch so it’s not forgotten.

$OXY – Warren Buffets recent favourite and a name which will no doubt be forgotten whilst people fight over tech. Now you may think this is a bad thing but quite often it’s the opposite. You have this massive FOMO run up followed by a clean pullback and retest of the 10ma. Most people who have gone short will likely want to get out to chase tech or will be forced to exit if we squeeze/breakout. You’ll then have people who aren’t watching open chase AFTER we break out. In short, these type of plays can be extremely lucrative when the narrative has no actually changed.

As you can see we have a lot of potential on watch and in different sectors, all are great names, good value, nice growth and nice charts.