Flash Reset

2021-08-26 | Jack Roberts

As a trader, my first love was and always will be Options. Later I started trading futures, and even though I just finished teaching a class on how to effectively trade Micro-Futures, I want to take it back to the good ole’ days and simply write about my top 5 bullish plays going into 2022. I think it’s a good reminder to start off each month with a fresh slate and really start to focus on what might just be easier to sit through.

September is my favorite month because it’s after summer, things are kicking back into gear, and we can look back at what happened over the summer and continue to create our market POV based on what happened previously. Volatility is great, that’s what we need, but recently the market has been volatile and conviction-less. In other words, giant moves that may not necessarily hold up. So, in this environment I like 60-day- out bearish verticals on the indexes (QQQ, IWM, SPY, NDX). Take your pick, but personally I like the cash settled indexes. This allows me to have bearish exposure in the markets without too much risk on. Typically in September I want to buy a solid pullback. Right now, solid can be translated to a /NQ @14,300 or an /ES @4,200. In a perfect world we would come in and swoop up all the long-term exposure into Christmas.

October will probably be brutal, just as the 2nd half of last October and November were brutal. When I say brutal, I really just mean GIANT swings with a market with no conviction. While I know it appears to look like we are constantly making new highs, we are still making larger and nastier pullbacks. Take NFLX and TSLA for example, two really nice solid months and then the moment TSLA holds $700 and NFLX easily holds $535-$540 things look solid and all you want to do is buy the thing for the next run higher. These sustained pauses are a chaser’s worst nightmare, so that’s why I am continuing to tell people to just wait for the market to pull back.

November means NVDA. I love Nvidia and I especially love the semiconductor shortage everyone wants to talk about. Meanwhile, semiconductors are hot and holding key support levels on higher than average volume looking back 3 weeks. Not to mention – the Nasdaq and S&P both have squeezes, and while it might look like the market is taking a pause. To me, this feels like a big pause for another big leg higher.

I’m typically a Tuesday to Friday trader. That means I look at Monday as if it’s a card coming from the dealer. I just want to see more from the market before I start making any trading decisions. So, we have a pretty substantial move up like we did on Monday, and now things are kind of quiet to neutral. I think there’s a lot to be said for the market taking a break, especially if we start to see a longer duration boost in small caps (it’s rare but they happen). Right now, my very specific favorites are honey badgers like NFLX, RBLX, MRNA… and yeah I like oil short for a while (it’s an OPEC/EV play). And I continually look for a nice dip in crypto.

As we journey into the Fall of 2021 you can be sure that I will continue to look at the PCALL/SKEW and always use TICKS and/or a combination of market internals. But even with all that really good information, you still have one job, or at least I HOLD MYSELF TO THIS VALUE IN TRADING, “Don’t pay a hefty price anticipating a bear market that isn’t there”. That’s why you really need to be a little more selfish and set reminders on setups, just as I have done for buying NVDA, NFLX, TSLA, ZM, MRNA on every dip that may come in our path in September. Below are charts of NVDA and TSLA respectively, like I mentioned before, these are both great setups to be early to. I feel like TSLA’s chart has potential to see $800 again, especially if we can squeeze our way into higher highs.