Pouncing On Pullbacks, Riding Into Rallies


Simpler Trading Team

Apr 12th 2021  .  3 min read

Has Spring in the stock market renewed a conviction toward momentum and direction?

Monday’s market action may have added confusion toward supporting that bullish sentiment.

The Dow closed at 33,745.40 points to fall .16% (55.20 points down on the day). The Nasdaq slipped to 13,850 points for a .36% dip while the S&P 500 was almost flat and only down .02% to 4,127.99 points.

Despite the market chopping along with mixed messages there are indications that any pullbacks in the near term won’t override a market conviction to the upside.

The key for Simpler’s traders is to track the data and follow the charts to navigate market uncertainty. March market action could be described as a “ruffling of the feathers” with some April holdover as upside conviction solidifies.

There is more “classic” to this movement than “anomaly.” Respect is warranted for this market as it has proven resilient in its determination to rally through volatility.

What are the plays as this market sets up through earnings and a run into summer?

Simpler’s traders are looking for low-risk setups and not shy about executing less expensive options with a lower probability of success. Data and charts help define risk with this strategy to improve profit potential.

As the market chops and rocks with each pullback then a rally, past successes of Simpler’s traders offer insight into following squeeze patterns across charts and using butterflies, verticals, and unbalanced butterflies as plays. Time frames are important to watch and Simpler’s traders are planning for shorter trades over days and not weeks.

A market like this can get complicated so gaining skills with these setups is a must.

Simpler’s traders are seeing various sectors — electronic payments, banking, semiconductors — begin to set up for moves. The window for “run into earnings” plays begins to close this week as companies start filing reports over the next several weeks.

With so much activity Simpler’s traders are working to maintain a narrow and reasonable focus on tickers leaning to the upside. This market has shown a tendency to mix up signals about the strength of its bullish nature.

Avoiding confusion and following sound setups allows traders to pounce on pullbacks and ride into rallies.

We Saw: Big Tech making big acquisitions — 

  • Muted Monday before earnings reports kick off
  • States take aim at tech “monopolies”
  • Nations building steam to take aim at crypto?

We’re Watching: Tuesday inflation report, market reaction —

  • Tracking bulls and taking any profits available
  • More squeezes, more upside opportunity
  • Setups in: DIS, APPS, NFLX, UPWK, CAT