2020-11-18 End of Day (EOD) Trade Setups

Buy and sell recommendations by sector, strategy, and condition (i.e. buy or sell) that came out of the system at the close today.

Here is what stands out to me in our universe of 325 of the largest market capped stocks. Also, major ETFs and futures are also scanned:

Bearish Whiplash Overnight Setups

Energy, Financials, and Industrials were the majority of Whiplash SELL trades. Whiplash is a short term climax or exhaustion pattern. It’s a simple strategy that looks for a gap in the direction of the trend (up in this case), followed by an intraday reversal where we close in the lower half of today’s range. This reversal tends to follow through the next morning (possibly 2-3 days), so the system recommends the overnight short.  If the next day opens higher than today’s close (indicating a loss on the position, we sell immediately, taking the loss. If the next day opens with a profit, we trail a stop to protect the profits.

Here is a look at all of the symbols in these 3 sectors that trigged the whiplash trade. Have a look through a few of their charts to get to know this climax pattern.

Futures and ETF Index Overnight Setups

I also like to see what overnight trades were recommended in the futures (note that the system only looks at regular trading hours, not overnight action) and sector index ETFs.  These can be quickly determined by selecting only Industry = Not Applicable in the Explore Trade Setups.  Again, lots of bearish Whiplash and bearish Anty trades — 24 in total and only 1 buy recommendation as seen here:

The Anty is a very short term retracement pattern that uses stochastics crossovers for trade signals. Only a handful of days are really factored in so it can have a lot of false positives but gives us an idea on quick shifts momentum which tend to proceed larger moves.

Yesterday the system issued a lot of short-term 2-period Rate of Change bearish setups (87!) at the close primarily in healthcare, utilities, industrials, and technology. So today’s bearish setups could just be the tail end of a small loss in momentum that really started a couple of days back.

Thursday’s Bullish Setups

Tomorrow the system has a fair amount of bullish setups on paper. We’re using this feedback to get a sense of what is going on under the surface of the market. These bullish setups are composed primarily of ADX Gapper, 80/20, and the Momentum Pinball.  Let’s run through the gist of these strategies:

• ADX Gapper (83 potential setups): This is a retracement pattern that allows us to enter in the direction of the primary (bullish in case) trend.  It uses the ADX directional indicators. We wait for days when the market gaps in the opposite direction (below yesterday’s low) during a strong trend and climb aboard for a couple of days. Only the strongest stocks are chosen. You will see the system thinks that is in Industrials, Discretionary, Financials, and Technology.
• 80-20 (75 potential setups) and Momentum Pinball (72 potential setups) are both very similar to one another.  80-20 strategy looks for situations where the market opened today in the top 80% of the daily range and closed in the bottom 20% of the range. The bigger the bar the better and today had some large bars. The next day the market must trade below today’s lows, then REVERSE and trade towards that low. We enter buy stops near that key level. If filled, we place a protective stop near the low we would see tomorrow.
• Momentum Pinball works well in chop. It is very short term and is exceptional for 1-2 day flips. It uses the one period rate of change (momentum factor).  Tomorrow we wait until 10:30 to see the first hour’s range. If the high of that range is then exceeded we enter and place a sell stop at the low of the first hour.  If the trade closes with a profit, it is carried overnight. Typically exiting on the morning of the following day.

Above is a breakdown of these bullish trades by strategy and sector; specifics you can look through on either Daily Setups report.

It’s key to remember that these are not hard and fast setups and provided to give active traders a flavor of what the system is seeing under the surface.  I would use it as just one input into your daily plan. It helps to see alternative strategies.

Good Luck!