If you missed it, we provided an introductory video that summarizes the Trader Membership and its strategy. We also explain our strategy on potential stop losses here, and entry points in this report.
We have five new setups this week.
New Setups
- Alphabet Inc. (GOOG)
- JPMorgan Chase & Co. (JPM)
- NIKE Inc. (NKE)
- SPDR Energy ETF (XLE)
- Corn Futures
Asset Classes
Equities
- Alphabet Inc. (GOOG): New Setup
- JPMorgan Chase & Co. (JPM): New Setup
- NIKE Inc. (NKE): New Setup
- Adobe Inc. (ADBE): Pending
Equity ETFs
- SPDR Energy ETF (XLE): New Setup
- iShares US Home Construction ETF (ITB): Pending
- Utilities Select SPDR ETF (XLU): Pending⇒Monitoring (Divergence was burned through as both RSI and price made new low).
- Health Sector Select SPDR ETF (XLV): Pending⇒Active (turned active September 5).
Commodities
- Corn Futures: New Setup
Equities
New Setup: Short: Alphabet Inc. (GOOG)
-Bearish divergence setup with price making higher high in September and RSI lower high compared to late July.
-A break below the trendline extending from July would activate an objective sell signal.
-Target one is aligned with horizontal support, and would see price fall below the 50-DMA. Target 2 would meet the top of the unfilled gap from May.
-Target 3 would see price back to the 200-DMA, which would need a sharp reversal lower in order to be met.
-Despite the sell-off in stocks in August, GOOG has been relatively resilient thus far, but another move higher in rates could ignite some potential weakness.
-The potential stop loss is placed slightly above the YTD highs.
New Setup: Long: JPMorgan Chase & Co. (JPM)
-Bullish divergence setup with price making lower low and RSI higher low in September compared to end of August levels.
-A move above the downward trendline starting in July would activate the buy signal.
-The divergence is very short at just a few weeks long, so targets 1 and 2 are pretty tight and meet key horizontal levels.
-Target 3 would see price meet the early 2022 highs.
-A potential stop loss is placed slightly below recent levels and at horizontal support.
New Setup: Long: NIKE Inc. (NKE)
-Bullish divergence setup with price making lower low and RSI higher low in August compared to beginning of June levels.
-A break above the 50-DMA and the downward trendline that extends from June would activate the buy signal.
-Target 1 aligns with the summer highs and is close to the 200-DMA. Targets 2 and 3 are at key horizontal resistance levels.
-A potential stop loss is placed slightly below the YTD lows.
Short: Adobe Inc (ADBE)
-Bearish divergence setup with price making higher high in September and RSI lower high versus end of July levels.
-A break below the short term trendline and 50-DMA would provide an objective sell signal.
-Target 1 is slightly below the 50-DMA, while target 2 is at a horizontal support level. Target 3 would fully fill the gap from June.
-A potential stop loss is placed slightly above the YTD highs.
Equity ETFs
New Setup: Short: SPDR Energy ETF (XLE)
-Bearish divergence setup with price making higher high in September and RSI lower high versus middle of August levels.
-A break below the trendline starting in June would activate the short trade.
-Target 1 aligns with horizontal support, target 2 with both the 50 and 200-DMA, and target 3 would need price to revert substantially lower in order to be met.
-Macro Catalyst: Recent gains in oil prices have been driven by supply cuts from Russia and Saudi Arabia. A weakening demand backdrop or a supply boost that would counter the production cuts could stall the oil price rally, and Energy stocks with it.
Potential stop loss is placed at the YTD highs.
Short: iShares US Home Construction ETF (ITB)
-Bearish divergence setup with price making higher high in late July and RSI lower high versus end of June levels.
-A break below the trendline that extends from the end of May would provide the signal to go short. Price has fallen through the 50-DMA and is close to testing the trendline.
-Price would fall below the 100-DMA before it hits target 1.
-Target 2 aligns with horizontal support and the 200-DMA, while target 3 would need price to substantially reverse course.
-Macro catalyst: Homebuilders have seen significant upside in 2023 given the constructive backdrop for low housing inventory. Continued higher rates and a potential falloff in home prices could contribute to downside for the industry given a lot of good news is already priced in.
-A potential stop loss is placed slightly above the all-time highs.
Commodities
New Setup: Corn Futures
-Bullish divergence setup with price making lower low and RSI higher low at end of August compared to beginning of August levels.
-Price has broken above the 50-DMA, but a move above the downward trendline from June would activate the trade.
-Target 1 is close, given the short duration of the divergence at just two weeks old. Target 2 would see price rise back to the 100-DMA, while target 3 at the 200-DMA.
-Macro Catalyst: Corn prices could see upside if there is further escalation in the Ukraine/Russia conflict that would threaten the supply of grains from Ukraine. Deteriorating weather conditions in the U.S. could also negatively impact supply of the commodity.
-A potential stop loss is placed slightly below the YTD lows.
Corn is missing Target one value and I can not for the life of me find a symbol on CBOT that matches GOTs let alone any of them which have the same value for Sept 5th.
Any suggestions (except that one…)?
/zc
Thanks.
I looked at those, right, but when I looked at the selections none of them produced a graph with a Sept 5th value equal to what is shown in this report, ~520. Particularly in this graph, the trailing last few days of the graph shows prices at lower lows and most all the others are flat or are rising.
I’m using TradingView and my vertical axis is scaled Logarithmic.
I’ll assume that the “Generic first future” means Sept 23rd.
Is there a resource that can outline how to execute this kind of trade from entry to exit strategy?
Thanks again for any additional insights.
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