In this week’s free market analysis video, we look at some Fibonacci Confluence levels that prompted us to short the S&P500 on Friday last week. We’ll also look at potential support levels as the market pulls back.
The swing trades we’ll cove this week are names that are holding really well right now that are in a Weekly Squeeze. The Squeeze indicator is great for finding stocks about to explode and the fact that these two stocks are holding up well during the pullback and look like they want to breakout could mean big profits for option buyers but the timing is important here.
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Weekly Stock Market Wrap Video Transcription:
Welcome to the StockOptionAssasin.com’s free market analysis video for Swing Trading Options. This is Eric. It’s about the lunchtime hour, Thursday February 21st 2013.
Let me go over three things. It’s going to be a quick video. We’re going to first go over where we shorted the S&P. We actually shorted a couple of days ago, and why. Also, two plays that we’re looking to potentially getting long on that I want to share with you guys.
First of all, what we were looking at in our Market Timing Service with the S&P’s was obviously the market had broken out here. I’ve been looking at some Fibonacci levels with our members and basically the market had this big retracement. This was from the September high of last year down to the November low, and then we rallied and took off from there. One thing we do is measure extensions of moves. The extension of this retracement came up to the 27 extension. It was at 151.76. That was a pretty key level we were watching.
I’m actually going to switch to a weekly chart real quick so that you can see this a little better. The other move we had was from the November low to this high in December and then we rallied from there. Let’s switch back to a daily so you can see this a little better. It’s a little bit congested there. But from the November low to the December high, we pulled back with a 61.8 retracement. We rallied on, so now we’re at this 61.8 extension of this leg up here. When you put those together, 152.30 was a number that I was watching with our members. Last week, we started to rally above that in the very last part of Friday. We rallied up and then the Wal-Mart news came out about the sales have been the worst in years and all that stuff, so we actually took a short there.
Basically, what I was looking at on the weekly chart was that we started to peak above 152.30 and then we actually closed back in. We were right in between those levels there. We took a short on the S&P. We bought some March (I think it was the) 154 puts. To be honest with you, Monday we started to break out. We were taking heat on those puts but that level ended up holding with that huge reversal yesterday and now we’re looking for a further downside.
First target downside, you probably can get a little support around 149 and change on the SPY, but ultimately I think we’re headed to this breakout level and that 27 extension of this move, which puts us around 148 in change. At that point, you may get down to the 50-day moving average, but I do think 146 is in the cards potentially. But again, it’s not going to go straight down. I think you’re going to find some support around 148-149, probably get a bounce and then reassess there and see if it’s going to roll over or not, or if support really holds there. That’s my thoughts on the S&P.
What I’m looking for now is there are two plays that we’re looking at with our members. The first one is Verizon.
Verizon Communications Inc. ($VZ)
Verizon has been holding up extremely well. This was in January. Let’s see earnings around the horizon here. We don’t really have any earnings risk right now, but what we’re looking at now is a weekly squeeze play in Verizon. If I’m on a weekly chart, basically what’s happening here is Verizon has been chopping around. The $45 level has been pretty stiff resistance for the past few months. We’ll call this the resistance level. Then we have this ascending triangle pattern happening on the weekly chart.
But the weekly chart is in a squeeze. If this continues to go up and maintain its average, you’ll see the market is down. As of right now, the market is down another 0.7%. But look what Verizon is doing. This thing wants to break out. Am I going to buy some calls today? No, because I think it might be contained for the next couple of days. This might not be something that we take a trade on until next week. What I would like to see is the daily squeeze to turn around. We have some other proprietary indicators we use with our members to help us make some of these decisions.
But ultimately, I like Verizon here. I like its consolidation. If you just ignored the market right now, this is a move up after earnings, positive reaction after earnings, so earnings risk is either way for now. This thing wants to break out. 45 is resistance. We had somewhat of a triangular pattern here. But again, the weekly squeeze is going to play out. Squeeze typically lasts 6 to 8 bars, sometimes more, sometimes less, but 6 to 8 is what I look for.
If we look at how many weeks this thing could go up, if this went up six weeks, I think we could easily test 47, if not 48, and potentially break out. This I would be looking at this point April options, something like first in the money, maybe first out of the money. But I want to see how Verizon holds up over the next few days. I would love a pull back at the moving averages here. The 50 and the 200 are pretty much tied together here. A pull back to 44 and change would be welcome. I don’t know if we’d get that pull back, but if the market does come into that 27 extension we’ve talked about, this may be worth a long.
NVIDIA Corporation ($NVDA)
The other one I like is NVIDIA. It’s actually holding up relatively well. Also, it’s down 0.2%. This is actually in a daily squeeze. Right now it’s going down, so this one might need a few days. But also, weekly squeeze, moving up. Squeeze is moving above and this thing is maintaining this pattern. We had earnings.
Let’s go back to the daily chart. Earnings a few days ago had a pretty decent reaction. You can see the 200-day moving average on the daily chart is keeping this in check. I think any move down the $12, look for some sort of support around $12 if it gets down there, and watch this squeeze. If this squeeze can turn around, then I would be looking for this to break out as well. Again, a weekly squeeze can be powerful. If this thing can break out above the 200-day moving average which is 12.82, I think this thing could get up, potentially retest some of these levels ($14) and that will be a big move for a $12 stock.
That’s A Wrap:
Those are some of the names we’re watching. If you’re interested in learning more about the Squeeze Indicator and how we use it and the other proprietary indicators we use to monitor these trades, and also if you want the trade alerts for when we do take these trades, take our 30-day trial. We’ve reduced price on that. Go to the website if you’re not there already. Click on the Trade Alerts tab. Start the trial. Get the trades. Get the education. We’ll see you guys on the inside!