Market Recap on some tactics at All Time Highs
S&P 500 and Nasdaq finished the week at record closes as the U.S. and China reportedly reached phase one deal in their ongoing trade war which includes some tariff easing and agriculture purchases. If you take a look at the S&P 500 and on the weekly perspective, the market seems can extend further than we think they can. So as a trader for now whether you look at charts or fundamentals, you got to be aware that stocks can trend higher and higher.
When the markets break to new highs, it forces retail and institutional short players to make hard decisions, decisions as should they go ahead and bail out their shorts or to make rolls on their losing trades that are bearish or hedged. For bulls, it forces them to question if they are underperforming the index as the S&P 500 gained 25% this year and their portfolio is up just 10%., and they might feel can't wait until the next pullback and should get in the market now.
( S&P 500: 3168.80 +0.01% DOW: 28135.38 +0.01% NASDAQ: 8734.88 +0.20%)
The new highs force decisions, and in some of the stocks, we can see the decision-making process accelerating like AMD which is a strong stock and getting even stronger.
So what could be the tactics behind this type of strong stock that joining the market at all-time highs? The answer could be a bull verticals, call spreads on pullbacks. How to deploy it through the trades?
For instance, let's pick the AMD's daily chart . By deploying those spreads or verticals based on the demonstrated trending logic, you need to find the most recent pullback as a support, in this case, it was on its 20 EMA line to its 39.2 level, if you think that won't hold you can also lower it to 30 EMA line which at 38.3 level. Then set these supports as your entry to target a prior record high as an exit (or simply just target a higher resistant line drawn above).
For clarifying, in options trading, a bull call spread is a trading strategy designed to benefit from a stock's limited increase in price. The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price. The bullish call spread helps to limit losses of owning stock, but it also caps the gains.
In the end, traders, go and find the strongest stocks about to join this market ATH where these shorts being squeezed, follow the stronger trend to take gains and stop losses. Have a good weekend!
When the markets break to new highs, it forces retail and institutional short players to make hard decisions, decisions as should they go ahead and bail out their shorts or to make rolls on their losing trades that are bearish or hedged. For bulls, it forces them to question if they are underperforming the index as the S&P 500 gained 25% this year and their portfolio is up just 10%., and they might feel can't wait until the next pullback and should get in the market now.
( S&P 500: 3168.80 +0.01% DOW: 28135.38 +0.01% NASDAQ: 8734.88 +0.20%)
The new highs force decisions, and in some of the stocks, we can see the decision-making process accelerating like AMD which is a strong stock and getting even stronger.
So what could be the tactics behind this type of strong stock that joining the market at all-time highs? The answer could be a bull verticals, call spreads on pullbacks. How to deploy it through the trades?
For instance, let's pick the AMD's daily chart . By deploying those spreads or verticals based on the demonstrated trending logic, you need to find the most recent pullback as a support, in this case, it was on its 20 EMA line to its 39.2 level, if you think that won't hold you can also lower it to 30 EMA line which at 38.3 level. Then set these supports as your entry to target a prior record high as an exit (or simply just target a higher resistant line drawn above).
For clarifying, in options trading, a bull call spread is a trading strategy designed to benefit from a stock's limited increase in price. The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price. The bullish call spread helps to limit losses of owning stock, but it also caps the gains.
In the end, traders, go and find the strongest stocks about to join this market ATH where these shorts being squeezed, follow the stronger trend to take gains and stop losses. Have a good weekend!