Trading Plan | Week of July 13th
Where the QQQ trend stands as it tightens into a VCP, plus 9 names on the Focus List.
Welcome back to the Weekly Trading Plan. This is what we are covering this week:
Market Pulse. A read on whether the QQQ resolves its tightening range higher or needs more time to chop, and what six distribution days means for how aggressive we get on new buys.
The Focus List. 9 names worth your attention this week. Charts, commentary, and the levels that matter for each one. Current holdings are tagged. The rest are setups we are watching.
Quick reminder before we get into it:
Nothing in here is financial advice. This is one trader’s read on the tape and the names worth watching. Do your own research, manage your own risk, and never trade money you cannot afford to lose.
How we trade these names. Every name in here is traded the same way, and you should understand the rules before you act on a single one of them. We use a 5 to 7 percent stop from our entry, no exceptions. We know where we are getting out before we get in, and we set the stop the moment we buy. We manage risk first and chase gains second. Our entire edge is taking losses quickly and letting winners run, which means we are often out of a name fast when it does not work. Do not assume any name listed here is still a position by the time you read this. A stock appearing on the Focus List is not a signal to buy and hold. It is a setup we are watching with a defined risk plan. If you cannot define your risk and honor your stop, do not take the trade.
Let’s get into it.
Market Pulse
The QQQ is up to six distribution days, and normally that number puts us on alert. But the price action is telling a more constructive story than the distribution count alone. The index is coiling into what looks like a volatility contraction pattern, getting tighter and tighter as it moves sideways. The SPY is doing the exact same thing. We are technically in chop, but the majors are tightening rather than breaking, and when that contraction shows up in the index itself and not just in individual names, that is a strong tell for the general market.
The traffic light is mostly green, with one flag. The Russell has held above its 21-day almost the entire stretch. It dipped below intraday on Wednesday July 8th and recovered fast, and Friday’s bar closed above the 21-day but the low is dipping just underneath. Our rule is simple. We want the low of the price bar above the 21-day before we put on new risk. Green light, red light. Small caps performing is our risk-on confirmation, and right now it is a soft yes, not a firm one.
This is a decision week. Either the majors follow through on this pattern, or they need more time to chop, or this rolls into something deeper. All three are on the table, and none of them would be a shock. The setup looks good. Good is not the same as confirmed. We stay measured until the follow-through prints.
The Focus List
$PANW, Palo Alto Networks [HOLDING]
PANW did nothing wrong. It had an incredible run and one of our better trades of the year, and then it pulled 15 percent off its highs in two days. Aggressive, a little scary in the moment, and completely normal for a name that ran that hard. It is holding above the 21-day and respecting it well.
It broke the 10-day, which is where we trimmed, but we are still holding a core position. The 21-day is the line in the sand. It can trade below it intraday and we are fine. A close below the 21-day forces us out. Cybersecurity as a group is acting well, which keeps the backdrop supportive. For now this is a hold-and-honor-the-line situation, nothing to do but let it work and respect the stop.
