Daily Plan 8.1.24
Welcome back everyone!
Before diving into my analysis, I decided to take a different approach to this newsletter. My focus was to provide more detailed insights on the setups being called and those on my radar. I included a deeper analysis of the Emini setup for tomorrow, along with the volume profile chart used to determine the levels. There will be a shift away from intraday levels on stocks to more of a swing approach, calling for longs at VAL on strong stocks and shorts at VAH on weak stocks. Many more stocks will be included as I shift focus to what stocks are setting up rather than focusing on the same five stocks every day. Any and all feedback is appreciated!
Every session so far has been filled with interesting volatility.
This week's performance has been quite mind-boggling, as seen in the chart below. Yesterday, we tested the bottom of this week's range on both the Emini and Nasdaq. By the open, we had already broken out to the upside, yet AMD and MSFT were not pushing higher. The Nasdaq was the weakest index at the low and made the most significant recovery today as tech stocks fired back strongly. We saw an attempt by IWM to climb back above the indices in terms of weekly performance, but this was quickly shut down right after Powell's press conference concluded.
I hope these insights provide a clearer picture of the current market conditions and the setups I'm monitoring. Your feedback is valuable as I continue to refine and improve the content of this newsletter.
Now, I will shift my focus to the methodology I use for all swing setups. While some setups are identified through volume profile analysis, the majority are determined by a proprietary system I developed. To clarify, I do not rely heavily on technical indicators but prefer stocks that are trending. As I previously mentioned, the strategy involves longing strong stocks and shorting weak stocks. There are additional criteria that I consider, which are reflected on each chart.
The purple zone marks an area that is 20% below the All-Time High (ATH). The green and red lines represent crossover points. A long setup is triggered when the green line crosses above the red line within the 20% ATH cloud. The exit point is when the green line crosses below the red line. Additionally, I only focus on stocks that have been backtested with a score of 9 or 10, based on a scoring system of 10. The scoring criteria include the win-loss ratio and profit factor. These parameters ensure that I concentrate on the strongest stocks, but please note that these numbers may change over time as market conditions evolve.
In future updates, I will delve deeper into this system. Below, I will begin by covering each setup that is currently developing and what specific criteria I will be looking for to initiate a trade.
MCK - McKesson
Company background: The company delivers a third of all pharmaceuticals used in North America.
This stock continues to be pinned right at its All-Time High (ATH) while consistently pushing to higher prices. Currently, we are on the brink of triggering a long setup as the price curls upward. Once this setup is triggered, the 650 calls will likely be used to capitalize on the move. Ideally, we will utilize LEAP contracts or options with at least six months until expiration for these setups. Remember, these are swing trades and will take time to develop, making them viable for those who are unable to day trade due to having a regular job. This principle applies to all the setups I am discussing. Patience is crucial, as these trades are designed to capture larger moves over a longer period.