Search

It's Like Candy Land In Small Caps - Morning Market Squeeze

Key Tactical Takeaways:

> After yet another S&P correction in time, not price, President-elect Biden is slated to speak to the nation this evening to layout plans for yet another MASSIVE round of manipulation that just may be the catalyst for the next blow-off rally in the S&P. Stay long against SPX 3780.


> If you're not looking for opportunities across small caps, you're missing out on some of the best setups in years.


> GLD appears to be ... right now, so any close < ... would spark a test of the ....


> With strong demand for this week's long-end Treasury auctions having sparked a correction below 10-Yr's 1.09% level, we'll be looking to short TLT between ... and ...


> Were going long ...., .., ... (also look at ...), and ... at today's open, and may be quick to shed HCCI.

Some Quick Thoughts:

There's nothing like the proposal of trillions of dollars in additional stimulus to help lift struggling groups up off the mat (namely FAANG) and shorten the life of the first corrective dip in rates since the start of this year's rate spike. We've been sleeping a lot better these past few months, ever since we became resigned to the fact that trying to pinpoint tactical turning points in a manipulated market is a fool’s game. From the BoJ now acting as the largest buyer of Japanese stocks to the US President-elect now slated to go on TV this evening to propose the biggest in a long line of stimulus packages, free markets have gone the way of the Dodo bird. Therefore, it is with great delight that we've been focusing on what is a "candy land" of small cap stock charts.


Once again, the broader equity market has taken some traditionally top-heavy conditions and digested it in the form of time, not price (i.e., the S&P has corrected sideways in recent days). With that out of the way, we'll be adding a bunch of new trade ideas to the list at the open. The tickers include..., ..., ... (also look at ...), and .... There are WAY too many to consider. Unfortunately, it is our rule not to add more than 5 new trades per week. As a side idea, risk/reward looks good for a trade into the Grayscale Bitcoin Trust against a stop of ....

It's important to recognize some of the ideas we add to the trade sheet are also theta decay (neutral) ideas. That's how we view our recent addition of the ... ETF (...). As the ... is expected to simply move sideways to higher over the short-to-near-term, ... remains very vulnerable to testing November's lows. ... appears to be "flagging" bearishly right now, so any close < 171.48 would set the wheels in motion for such a test. After we added a long in UNG on Tuesday, Goldman came out yesterday claiming, a "Perfect bullish storm’ lies ahead for natural gas." We normally get nervous when Goldman upgrades a long trade we're currently holding, as they love to sell their book off to retail traders. However, we like where this recommendation comes in the cycle.


This is an abridged version of our premium content. If you'd like to have content like this sent to your inbox each morning, please click here to sign up for a risk-free, 2-week trial (no credit card required).


Please follow us on Twitter @xtractanalytics