Squeeze With Explosive Potential

2020-07-01 | Simpler Trading Team

An essential part of trading is waiting for those opportunistic moments when the market is about to explode.

Traders watching a three-day chart in key tickers have a heads up on a developing squeeze. This setup is showing a high-probability for a greater than expected move.

Transports are leading the potential to set off this move. Through the pandemic market, transports have shown that if they go up then stock indexes rise. The flip side is that if transports go down it’s an indication that stock indexes will follow a couple of days later.

With the three-day chart showing increasing momentum for a big move, it’s a matter of waiting until the squeeze fires to determine direction.

While transports are leaning toward a significant move, there is no guarantee of the direction until it fires.

The key is to stay ready for the squeeze to take off and use all available tools to take advantage of whether it fires up or down.

With history showing a tendency to rally into the Fourth of July weekend, this building squeeze is making for an interesting last day of the week tomorrow.

We Saw: Dow slightly lagging, but markets solid overall — 

  • Nasdaq staying solid about 10,000 points
  • Tech sector leads Nasdaq to another positive day
  • Facebook facing rough advertiser backlash

We’re Watching: which way the transports run —

  • Three-day chart on all tickers
  • If the next big squeeze fires before the fireworks
  • Potential in: TDOC, AMZN, SHOP, NFLX, TSLA

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