Our list of Pending Setups below also includes the setups’ historical status. This means labeling the setup as a new addition, continued pending, switch to “active”, or if an asset moved back to “monitoring” due to divergence no longer present. We also highlight the new setups below.
Active setups will not be shown on this Pending Setup report, as commentary and chart updates will be made on the Active Setups report that will go out on Thursday each week.
Regarding our new selections, we saw some equity market turbulence last week amid earnings reports which triggered some short setups from last week’s Pending Setups report. Those now activated setups will be covered in this week’s Active Setups report.
In adding new setups each week, we will attempt to be diversified, including ideas across different asset classes and both long and short setups, as market opportunities allow us.
If you missed it, we provided an introductory video that summarizes the Trader Membership and its strategy.
New Setups
- Paypal Holdings Inc (PYPL)
- Apple Inc. (AAPL)
- Bitcoin Spot Price
Asset Classes
- Paypal Holdings Inc (PYPL): New Setup
- Walt Disney Co. (DIS): Pending
- Nvidia Corp (NVDA): Pending
- Moderna Inc (MRNA): Pending → Active
- Netflix Inc (NFLX): Pending → Active
- Walmart Inc. (WMT): Pending
- Salesforce Inc. (CRM): Pending
- Apple Inc. (AAPL): New Setup
- iShares MSCI China ETF (MCHI): Pending (Potential to become Active today)
- SPDR S&P 500 ETF Trust (SPY): Pending
- Consumer Discretionary Sector SPDR ETF (XLY): Pending → Active
- Vanguard Value ETF (VTV): Pending → Monitoring
Fixed Income ETFs
- iShares 20+ Year Treasury Bond ETF (TLT): Pending → Active
- Bitcoin Spot Price: New Setup
- Palladium Futures: Pending → Active
Equities
New Setup: Long: Paypal Holdings Inc. (PYPL)
-Bullish divergence setup as price made lower low at the end of May while RSI made higher low compared to December 2022 levels.
-A break above the downward trendline starting in August of 2022 would provide an objective buy signal. The move above that trendline would also result in the first close above the 200-DMA for the stock since February, which would be bullish.
-Targets 1 and 2 are higher probability targets and align with horizontal support, while target 3 would need to see a sustained reversal higher in prices in order to be hit.
-PYPL was one of the growth stocks that was severely hit in the Fed’s normalization of monetary policy. The stock is still down 76% from its July 2021 peak, but the latest low that coincided with bullish divergence could have marked the ultimate bottom.
-Stop loss is placed at horizontal support and the 50-DMA.
Long: Walt Disney Co. (DIS)
-Bullish divergence setup with price making lower low in May and RSI higher low compared to March level.
-A break above the downward trendline starting in February would provide an objective buy signal, activating a long trade on a close above it.
-The 200-DMA aligns with our first target, while targets 2 and 3 are consistent with key horizontal resistance levels.
-DIS has been a clear laggard in the Communication Services sector with no sustainable rally in 2023 despite the sector gaining over 30% this year, so there is a potential “catch-up” trade if there is a rotation to laggards within the sector.
-The stop loss is placed slightly below the YTD low to ensure traders aren’t stopped out of the trade too early if price were to test that level.
Short: Nvidia Corp (NVDA)
-Bearish momentum divergence with price making higher high in July and RSI making lower high compared to early June levels.
-A break of the primary upwards trendline dating back to January would provide an objective sell signal, activating the short trade on a close below it.
-A checkback to 100-DMA could occur if weakness continues, which is currently in the middle of our target zone and currently at target 2.
-NVDA is the leader of AI craze, so placing stop loss only slightly above all-time highs will allow traders to get out of the trade quicker should AI optimism refuel.
Short: Walmart Inc (WMT)
-Bearish divergence as price made higher high in late July and RSI lower high compared to mid-June levels.
-A close below the upward trendline from March would prompt the short trade.
-Divergence is only a matter of weeks old, consistent with tighter target levels. Targets align with key horizontal support levels, while a sell-off to the 200-DMA would meet with target 2.
-Since March, WMT price action has been positive, but a break of trendline could change the recent bullish structure.
-Stop loss slightly above YTD highs, to allow for some leeway for retest before closing position.
Short: Salesforce Inc. (CRM)
-Bearish momentum divergence with price making a higher high in mid-July and RSI making a higher low compared to end of May levels.
-A break of the primary upwards trendline from December of last year, which also coincides closely with the 50-DMA, would provide a sell signal and activate a short trade on a close below it.
-Targets 1 and 2 align with key horizontal resistance while target 3 trades closely to the 200-DMA and the unfilled gap area from March.
-CRM has been in a bullish phase for much of 2023, until the recent consolidation around the $206 area from May to July led to a sharp move to a new YTD high. A break of this primary uptrend would be a decisive transition from its bullish structure however.
-The stop loss is placed slightly above the YTD highs, allowing for a retest before closing the position.
New Setup: Short: Apple Inc. (AAPL)
-Price made higher high last week while RSI hit a lower high compared to end of June levels, prompting bearish divergence.
-A break of the trendline that dates back to early March would provide a sell signal to enter a short position.
-Target 1 aligns with a check back to the 50-DMA, which price has not hit since January of this year. Target 2 is consistent with potential horizontal support levels while target 3 would see price test the 200-DMA.
-Apple has been one of the market leaders of this year due to the AI optimism, but a break of this trendline that has held all year would be bearish for the stock.
-Stop loss is placed slightly above all-time high levels.
Equity ETFs
Long: iShares MSCI China ETF (MCHI)
-China stimulus measures have helped China equities rally overnight, which may cause this setup to become active today if the current early market gains hold. If that’s the case, it will be included in this week’s Active Setups report.
-Price made a lower low in early July and RSI higher low compared to end of June levels, prompting a bullish divergence.
-A break of the downwards trendline starting in January would activate a buy signal. The trendline also aligns with converging 200 and 100-DMAs, which could make for a bullish structure should price rise back above those levels.
-Divergence is short in duration at just two weeks old, consistent with tighter targets. Targets 1 and 2 align with key horizontal resistance levels and are higher probability targets.
-Target 3 fills the unfilled gap at the 2023 high, but would need to see a more sustained reversal higher in prices in order for it to be hit.
-Macro Catalyst: China’s recent growth numbers were lackluster with 2Q GDP sharply below consensus. This could prompt more decisive stimulus efforts from the government and catalyze a rally in local equities in coming weeks/months.
Short: SPDR S&P 500 ETF Trust (SPY)
-Bearish momentum divergence with price making higher high in July and RSI making lower high compared to mid-June levels.
-A break below the short-term support line from mid-May would provide a sell-signal.
-Given the divergence is only two weeks old, this trade has closer targets to increase the potential success rate.
-After trading sideways for all of April and May, the S&P 500 recently broke higher, but this negative divergence could lead to weakness, including a checkback to the 50-DMA, which is at target 2.
-Macro Catalyst: With the recent euphoria, any deterioration of hard economic data, potentially starting next week with retail sales and industrial production, could bring back recession concerns, and cause weakness in equities.
Commodities
New Setup: Short: Bitcoin
-Bitcoin hit higher high in middle of July while RSI made lower high compared to end of June levels, causing a bearish divergence.
-Price fell below 30,000, and is now testing the 50-DMA. A break below the trendline that exists from January will provide an objective sell signal.
-Targets 1 and 2 are tight given the bearish divergence is short at three weeks old, allowing for higher probability of targets being hit. Target 3 would need to see price re-enter a bear market.
-Despite all the bullish rhetoric surrounding potential ETF approvals, bitcoin has been unable to break decisively above 32,000, which is strong resistance.
-Macro Catalyst: A countertrend rally in the DXY could pressure Bitcoin given its negative correlation to the dollar, in addition to an overall risk-off environment if economic data were to come in weaker-than-expected.
-Stop loss is placed at horizontal resistance at the high from May 2022.
Was the Netflix trade stopped out for a loss Wednesday the 19th?
Hi @Growgeek Thanks for your question. The NFLX trade was not stopped out on the 19th. We provided more context on the recommended stop losses in the pending setups in our recent report, where we stated the following:
” The stop losses placed on our charts are only suggested for setups once they become active. An Active Setup starts once a Pending Setup becomes triggered. We show a stop loss in a Pending Setup to provide guidance about where a stop loss could potentially be applicable once (and if) the setup becomes active. That can help traders already visualize the potential risk-reward before the setup turns active.
This means that if a stop loss level is hit and the setup is still pending, the trade isn’t necessarily disqualified from remaining a Pending Setup. It would only be taken off as a Pending Setup if the divergence is no longer valid. For a bearish divergence for example, if price hit a stop loss that is at a YTD high level, and the RSI also gained enough momentum to hit a new high instead of a lower high, this setup would then be disqualified as pending.”
In the event of NFLX, the new high that was hit coincided with continued bearish divergence, and then price ultimately broke down below the trendline, denoting this setup now active. We’ll review this in tomorrow’s Active Setups report. I hope that helps.
In an earlier post you said the trade was active, then it hit the stop and closed above the stop.
Was the trade active or not?
You need to keep the list current and live. When NFLX was disqualified as pending we needed to know at that moment. Yahoo will allow live data to your list so you can give proper timely alerts… Can you include an options recommendation?
Thank you for the quick reply.
NFLX became active on the 20th, when the stock closed below the trendline we pointed out on a closing basis. The stop that you mention was hit on the 19th, prior to NFLX breaking below the trendline on the 20th which activated the trade by our framework. As we laid out, the stop losses we put on our charts from Pending Setups are suggested levels for once the setups have become active, not for the pending setup itself.
Currently, we do not use Yahoo but rather Bloomberg for our technical charts. We are not producing intraday price alerts at this time, but it is a topic of ongoing discussion as we continue to advance this product.
Option recommendations is something we would also consider going forward.
I hope that helps. Thank you
When we see “Pending –> Active”, why is there not an entry in the Active Swing trades category for the asset?
What is the timeframe on the above charts ??
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