Trading Newsletter – 11/29/2020
Quote of the Week
“The goal of a successful trader is to make the best trades. Money is secondary.”
– Alexander Elder
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Okay, now that I’ve gotten that out of the way, shall we talk charts?
This week we diversified our chart plays into neglected industries and sectors. You’ll find value plays, growth plays, and even some cannabis plays (personally, I’m most excited to see how those play out). As always, please don’t hesitate to reach out to us on our Twitter or at email@example.com.
I hope you enjoy!
*See below for full calendar Presented by Earnings Whispers (check them out here)
Upcoming Economic Events
On watch for next week:
Charts, Charts, & More Charts
These charts are intended to help you to become a better trader. Don’t take every trade in this newsletter and expect to make money. Do your own due diligence and research before investing and/or trading.
I have noticed and heard that some of you are having issues with keeping up with our plays and catching them as they happen.
A simple solution to that would be as follows:
– set alerts on a brokerage app/software that you trade on
– take the breakout levels we give you (or pick a resistance that you’d want to see broken before entering your trade) and set price alerts for these levels
– Track our portfolio using an excel spreadsheet
For trades you take but can’t monitor attentively, set alerts at the support/resistance levels given to know when your position is at a cautionary level.
FB (1-hour timeframe)
Analysis: Yes… I’m bringing Facebook back after it played us a couple of weeks ago, but hear me out: It touched daily trend line support and demand. Since then, a nice little fakeout to trap shorts occured, creating a nice ascending bull flag nearing breakout levels. QQQ and SPY were clearly breaking out last week and FB definitely benefited (and will continue with Cyber Monday) from digital marketing campaigns running full steam. I expect FB to make an explosive move higher towards $290. This is only if $280 can hold as support to validate the breakout.
Resistance to watch: $280, $290-$292.50 Supply Zone, $295, $300
Support to watch: $274-$275.67 Demand Zone
Long invalidation level: $273.75
Breakout level to watch: $281
ROKU (1-hour timeframe)
Analysis: ROKU has blown my expectations out of the water. I projected $230 back at $177 and alas, here we are at $278 forming bullish pattern after bullish pattern. This time we see an ascending bull flag. $280 is the line in the sand, and to be completely honest, I wouldn’t be surprised if ROKU went for $300 in the near future. The fibs noted are projected resistance levels based on the most recent move, but keep in mind we’re at all-time-high levels, so, as always, be mindful with position sizing.
Resistance to watch: $278-280 supply, $289-292, $298.23-$300
Support to watch: $272, $275
Long invalidation level: break of the rising trend, $270 gap support
Breakout level to watch: $281
NFLX (4-hour timeframe)
Analysis: Netflix has been fairly quiet over the past couple of weeks, and it looks like the Netflix-and-chilling time is coming to an end. NFLX has been in a large, sideways daily channel for several months now and has made a nice higher low off the daily demand zone. What we’re looking for now is price action over the $495.50 supply zone. (Note: we’ve tested this supply several times already so it’s fairly weak)
Over $500 and Netflix will move towards $510 rather quickly to fill the gap above.
Resistance to watch: $495.50, $500, $510-515 supply, $525-$530 supply
Support to watch: $485, $490
Long Invalidations level: price action under $482
Breakout level to watch: $495.50
The House of Representatives will be voting on the legalization of marijuana on a federal level, sometime between Wednesday and Friday (2nd-4th). This is a HUGE deal.
As currently written, the MORE Act, whose lead sponsor is Judiciary Committee Chairman Jerrold Nadler (D-NY), would federally legalize cannabis, expunge the records of those with prior marijuana convictions, and impose a federal 5% tax on sales, The revenue would then be reinvested in communities most impacted by the drug war.
The legislation would also create a pathway for resentencing those incarcerated for marijuana offenses, as well as protect immigrants from being denied citizenship over minor cannabis violations. IT will also help prevent federal agencies from denying public benefits or security clearances due to the use of cannabis.
Again, this is a massive deal on multiple levels. The charts below are my favorites of the sector. The cannabis ticker $MJ (also called the “weed ETF”) moves slower but more steady if that’s what you’re looking for.
CGC (Weekly Timeframe)
Analysis: This is the weekly chart, but given the circumstances, this is absolutely in play, given that CGC has a short float of 16-21% (a considerable amount). We saw a massive volume spike for a bullish engulfing weekly candle, suggesting further bullish action is ahead. There is a gap fill on the daily (noted by the purple circle), so I fully expect this to climb to around $32. Watch for consolidation above $30, as a strong move over $35 could confirm further bullish price action until ~$40.
Resistance to watch: $29-30, $32-33.50 supply, $35, $40
Support to watch: $28, $30 once support is claimed
Long Invalidations level: price action below $28
Breakout levels to watch: $30, $35, $42
TLRY (4-HR Timeframe)
Analysis: Short interest right now is a whopping 33% and almost half of the market cap float is being shorted right now (can you say squeeeeeeeze time?). The EMA’s are pointing higher on every timeframe except for the daily, where the 200EMA resides at the $10 supply zone. I do expect a brief consolidation at the $10 supply zone before we rocket higher towards the $14-$15 supply zone.
Resistance to watch: $10-$11.50, $14.75-$16
Support to watch: $7, $8, $11 (if supply zone turns into demand zone)
Long Invalidations level: below $6.75
Breakout levels to watch: $9, $11.50, $16
If there isn’t news by Thursday, these setups can turn into some very profitable lotto Friday plays, as the contracts are already cheap.
Do not buy same week expiration on any play noted in this newsletter. All option expiration dates should be at least 2-3 weeks out at a minimum.
SHOP (30-minute timeframe)
Disclaimer: You can potentially lose all of your entry cost into this play as it’s noted as a ‘lottery play’.
Call Debit Spread (exp. 12/4/2020)
Buy the call $795
Sell the call $805
Projected cost of this lotto play as of right now is $195 and max profit is $805 Profits/losses can be taken earlier at any time before expiration with no penalty.
Analysis: E-commerce is the move this coming week as Black Friday is upon us. We can see a chart reversal happening on SHOP as retail is in the spotlight going into the holiday season.
Support to watch: $1007 / $997 / $985
Resistance to watch: $1054 / $1067 / $1086
HD (30-minute timeframe)
Analysis: HD is showing an inverse head and shoulders on the 30-minute chart. Recent reports state that home improvement is continuing to boom during the pandemic and the holiday season. The best type of trade is playing the trend as each sector plays a part in sector rotation (when investors sell a specific sector and buy into others). Keep the retail sector on watch as the holiday season sales numbers start to emerge.
Support to watch: $274.72
Resistance to watch: $277.80 / $280
PLTR (5-minute timeframe)
11/27/20 – SuRo Capital reportedly holding $4.6 million in shares.
Analysis: PLTR is holding the above trendline. Trading off of trendline support is simple: buy if the price bounces off the trendline. I highlighted how the stock reacted on the past two times it’s touched the trendline support. If PLTR holds the trendline support, refer to the resistance levels below. If PLTR breaks below the trendline support, refer to the support levels below.
Resistance to watch:$28.73 / $29.01 / $29.75 / $30.87
Support to watch: $27.29 / $27.00 / $25.29 / $23.94
JKS (15-minute timeframe)
12/08/20 – Earnings reported expected
11/27/20 – Company reported it sold it stake in Abu Dhabi Sweihan power station.
Analysis: JKS is experiencing an earnings run-up. The chart is showing a reversal as it looks to turn prior resistance into support. If this happens, it will confirm an uptrend is taking place. Look for a continuation headed into earnings as there’s a gap from the current price to the all-time-high price.
USB (4-hour timeframe)
As the rotation into value stocks continues, financials are still on the forefront of value stocks being invested in. With most banks still in the 10-14 price to earnings ratio (P/E) range, there is still huge upside for major banks in 2021. While major banks have seen dramatic moves recently (i.e., MS, GS, BAC, and JPM), there are still a few left that can make moves. USB has the best setup of all major banks and is sitting in a perfect cup and handle formation. While fair value on USB is closer to $85/share, in my opinion, I believe investors are still cautious when it comes to the financial sector, so I am putting my short-term target at $50/share. I have highlighted a five-wave Elliot Wave path to $50, with a break above $45 being key. A break below $42 would invalidate this move.
TSN (4-hour & 1-hour timeframes)
With the holiday season coming and the food industry yet to recover, I believe TSN will be the next value stock to make a strong comeback with vaccine news. With a price to earnings ratio around 9, TSN has upside towards $150/share in the long term. In the short-term, I believe $74 – $77 is a reasonable target. A breakout of the current trading channel and rise above $67 resistance is the confirmation needed to confirm a breakout.
CRON (4-hour timeframe)
CRON is one of my favorite ‘weed’ plays for the future. Unlike other cannabis companies, CRON has an amazing balance sheet and is cash flow positive. This makes it an ideal investment within the industry. With news that legislation will be voted on this week to legalize marijuana nationally, it’s the perfect time to buy the rumor. I believe CRON is about to become majorly bullish into 2021 and start a nine wave move to make a cup-and-handle formation. I am setting my price target at $25 in which will create a double top before retracing into the handle. On my chart, I show this unfolding over the entirety of 2021, but it could certainly happen sooner. Shares or January 2022 $10 strike call options are optimal.
– The Financial Cloud Team
Disclaimer: Investing involves substantial risk. Neither TFC, the publisher nor any of their respective affiliates make any guarantee or other promise as to any results that may be obtained from using the Newsletter. While past performance may be analyzed in the Newsletter, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, the Author, the publisher, and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice, and/or recommendations in the Reports prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.