Over the previous few weeks, the markets have continued their grind larger on the backs of huge strikes from tech-names like $AMZN, $GOOGL, and $MSFT. Whereas tech has been the clear chief right here, different sectors comparable to vitality, the financials, and transports “go away rather a lot to be desired.”
With the $SPY and $QQQ prolonged, being pushed larger by a really choose few shares, that is the time to scale down in position-sizing on lengthy positions. As bullish as issues look right here, we all know how shortly the markets can revert to the imply when they’re buying and selling on the 3+ ATR extensions. Cutting down in position-sizing will can help you proceed to revenue ought to the momentum proceed, however will serve you nicely ought to the markets run out of momentum right here shortly.
Although prolonged, what may ship tech shares even larger is the weekly squeeze at present firing lengthy in $QQQ. Similar to we noticed from $NVDA final month, when a weekly squeeze fires lengthy, some super momentum can get launched that sends the inventory larger for weeks on finish. With that being mentioned, $AMZN has its personal weekly squeeze firing to the upside, and after breaking out above an virtually year-long stage of resistance, the inventory may very well be poised to rally larger from right here.
Even with a probably highly effective weekly squeeze firing, we nonetheless wish to decide our photographs correctly as issues stay very prolonged. In these sorts of environments, I’m an enormous fan of ready for a dip to the each day 8EMA, and constructing lengthy positions in any decrease time-frame squeezes that setup at that stage. Early this week, $AMZN fired a 4 hour squeeze lengthy proper off of the each day 8EMA, and with that bullish construction wanting promising, I bought a put credit score unfold for a push into earnings. At present, that unfold is at nearly 70% of max revenue as $AMZN has soared virtually 6%+ over the previous few periods.
Over the subsequent few periods, I’ll be searching for $AMZN to make a transfer by $3750, which is the place I’d look to lock earnings and await the subsequent ultimate entry. After that, the subsequent transfer needs to be up in direction of the $3800 stage.
Tremendous bullish, tremendous prolonged, so make sure you “decide your spots correctly” and place measurement appropriately, simply in case the celebration involves a short-term finish right here quickly. Our primary job at these ranges is to guard earnings, not preserve forcing the difficulty!