Daily Plan 10.31.23
Markets Close Higher - What's Next?
Welcome back everyone!
To kick off the session, both McDonald's and On Semiconductors delivered favorable earnings results. MCD experienced a significant rally, although it fell just short of my target of 266. Meanwhile, ON's stock plummeted by over 20%, surpassing my earnings report target. Later in the day, WELL released its earnings report after the market closed, causing its stock to drop a few points and almost reaching my predicted target. This made it a perfect three for three in terms of earnings reports for our readers, and there are still more reports to come throughout the week. This year has been especially favorable for order flow-based earnings call predictions, with an accuracy rate of over 70%.
O experienced a robust selling pressure at the beginning of the session, hitting my designated short target before spiraling even further downward. It recorded a drop of over 10% in a single day. Notably, the short level acted as a formidable resistance, thwarting the stock's movement almost down to the last tick.
Subsequently, the indices displayed robust upward movements, breaking through the long levels on both the Emini and Nasdaq. However, the rally may not be what we hoped for in terms of follow-through. Nasdaq, at the start of the day, surged by +100 points before surpassing the long level, resulting in another strong upward move. The Emini also rallied, gaining more than +20 points from the long level but narrowly missing the long target. As we look ahead to tomorrow's session, it appears that the levels may remain unchanged, but we will delve further into this in the following sections.
Before delving further into our plan, I'd like to highlight the impressive performance of Tesla shorts today. We witnessed a remarkable intraday downside move, with the stock shedding over 9 handles in a single session. This significant drop is edging us closer and closer to achieving our swing short target. The current volatility in the market is playing to our advantage, resulting in a sharp increase in contracts, spanning from Long-Term Equity Anticipation Securities (LEAPS) to weekly options.
When it comes to managing weekly contracts, it's crucial to employ intraday market structure analysis to ensure effective risk management. This involves knowing precisely when to cut losses and, equally important, when to secure profits as soon as signs of a trend reversal on a shorter timeframe begin to emerge. However, I firmly believe that, as always, LEAPS remain the best choice for risk management, providing a stable and reliable approach to navigating the market's fluctuations.