Trading both sides of the market requires awareness to all of the flashing lights and signals the market provides in regard to its overall health. This week some technical damage done, with the largest single volume day in Nasdaq history on 1/7/25. Here is where we stand at the end of the week:
Years where the bull market runs it can often feel like shooting fish in a barrel but when the barrel inevitably runs dry I find that continued success for me comes from tightening up my focus a bit so I can see where the opportunities for meaningful trades will occur. When a market begins to unravel, strength and weakness really standout. Ensuring that I do not deviate from my risk management system has enabled me to stay safe in the turbulence over the years as well as capitalize on the opportunities that present themselves. This week saw the markets losing their 50 day moving average, which is one of two averages meaningful to those invested in markets as opposed to those of us who actively trade on a daily basis (the other being the 200ma). How much impact and how long this will last no one knows but shorting stocks into strength alongside looking for sell signals on gap ups have greater odds of succeeding when the market turns weak. Conversely, the odds of breakouts (one of my core strategies) working reduces substantially within a broader market sector standpoint, as a strong market tide is needed to lift most boats. Utilizing scans to search for those at or near their 50ma and potential breakdowns proves to be the most lucrative for new swing trades as the longer term traders look to either exit or take some profits off the table. Intraday I have been largely focused on signals within the futures contracts and intraday opportunities within TSLA and NVDA, as the range and signals were clear to me.
If you find yourself struggling this week I would hazard a guess that you are overtrading. Put more time into prep and planning your trades than actually pushing buttons and I have no doubt things will be more clear for me. Tremendous opportunities are presented each and every day, it is up to you to come to the battle the most prepared as possible.
Have a great week, trade well.
Data and Earnings For the Week
CPI on Wednesday alongside an active Fed team and an impending presidential inauguration will likely keep things spicy after a hot NFP. While I have no positions reporting, bank earnings are of interest to me this week alongside AEHR. Options are pricing in a 20% move, which if anything like its last few earnings releases, could be a great candidate to potentially fade a meaningful gap up, particularly if the overall market stays weak.
New Entries/Re-entries for the Week
HSY-short entry taken on the base breakdown. This was one of my best tickers in 2024 as well as 2023, love to see it potentially coming back into play for a 3rd year in a row. You can see on the monthly below it is below its 50ma with the 200ma a nice 40 points away if it really wants to go claim it.
EIX-short entry taken on news of fires. I looked at this one as I did HE in 2023 during the Maui fires. While blame has not been laid here for the tragedy that is taking place in LA yet, the potential of a delay in the power being shut off would point some fingers in the direction of EIX. I locked 1/2 in as it fell to its 50ma on the monthly but will look to add back should an opportunity present itself.
MCD-short entry on base breakdown. This was a great ticker for me in 2024 and will be on regular watch as more awareness is ideally brought to the correlation between diet and health by incoming administration.
VST-long entry on gap up, quarter size position where I will add on confirmed strength. If it loses the gap I will be out.
OXY-long entry as energy sector was one of the few green areas when the dust settled at the end of the week.
WGS-long entry on base breakout (above its 50ma), quarter position as I want to see it confirm strength if the market continues to be under pressure.
COPX-long entry, quarter position that I will add to as it confirms. It is my opinion that Materials and Energy may see some strength as we move into the new administration but as always, will trade the price action it provides.
Top Names on Watch
Big Picture Thoughts-10 days into 2025 and it certainly has been an active market. We are coming off of consecutive double digit gains in the markets the past two years so it shouldn’t shock anyone if the “January hangover” gives us a little pressure as the year kicks off. That being said, we could just as easily shake it off, re-gain the 50ma’s and proceed business as usual. It is not my job to predict, it is my job to react so that is where my focus is as we head into the week.
10 days into 2025 and here is where money was flowing.
Lumber is interesting to me, as it has a few pivotal dynamics that it is facing right now. As you are likely aware, Trump has announced that he will come out of the gates swinging with some hefty tariffs on our Canadian neighbors and China. Not surprisingly, this is heating up the price of lumber quite quickly. In the housing market, buyers are found to be signing up for new homes vs existing due to bloated asking prices. Finally, as you look ahead one has to factor in the massive spends CA will see as they look to rebuild 12,000 structures (as of this writing on 1/12/25) lost in the devasting fires. Likely not factored into the demand built for lumber so will only see prices higher as supply will struggle.
Exits for the Week-Continued to see a lot of exits in some longer term swings that finally gave way to moving average breaks which provided some meaningful cash to place into new opportunities.
Equity Portolio as of 1.10.25
None of this is buy/sell advice, just a fellow surfer sharing the ride. This is a rollup of my current positions, excluding crypto trades and intraday futures/equity day trades. Prior to subscribing to TraderVue, I used Excel for years to track my performance and trades and still use it to this day for my swing positions as you see here in my weekly posts. All of my intraday trading is tracked on TraderVue as I utilize their tagging system to analyze the type and profitability factor within trades, largely futures and some commodities/volatility instruments. While it is not quite pen to paper, there is just something about the work that goes into it that gets me more in tune with the positions and their movements. I track the % return as a gauge of weekly movement. As the below is just a snapshot to show recent movement, you can go back in posts or reach out if you are curious on my initial entry.
My swings are anywhere from a few days to a few months to years, so it is easier to stay on top of data with the number of executions. I do not define targets but just move my protective stops up as the stock continues to move. I will lock in partial profits into extended moves away from moving averages, generally at a minimum of 10% gain on position and then let winners run while trailing them utilizing 10/20/50 ma’s (choice of MA used contingent on how late stage I am in the trade and market conditions). Trade plan is to keep losses to 2% on most trades unless an unexpected opportunity presents itself and a proper plan can be put in place or something unexpected occurs.
