One of the best ways to earn money from market moves is in short- to medium-term swings; however, it goes hand in hand with having a reliable entry signal that fits within a definite trade plan.
In this week’s discussion, we’ll look at two possible setups for swing trading and reflect on last week’s opportunities to be disciplined.
Reminiscing About Last Week’s Opportunities
Last week was quite spectacular, with plenty of great performances from stocks like Netflix and Meta.
However, the trader may feel that they didn’t do a good job overall with all the missed or mishandled trades. Focus on studying the A+ opportunities you found, be proactive, focus on your strengths, and avoid getting into some subpar setups just out of FOMO and all the drama from the previous week.
Critical Catalyst: Nvidia Earnings
One major market catalyst for the week is Nvidia’s much-anticipated earnings report, scheduled for Wednesday after the close.
This can be a major market mover not only for Nvidia but the whole tech sector and broader market. Trading into earnings is risky, but preparation for post-earnings price action can be a strategic opportunity.
Identify key resistance and support levels in Nvidia and related stocks ahead of time to position for reactive trades following the report.
Top Swing Trading Idea #1: SMCI
Backside Short in SMCI
SMCI had an incredible ramp last week with the RSI hitting a brand new all-time high of 99 before the stock topped out and fell over 20%.
After these kinds of overextensions, any backside short strategy sounds intriguing. Here’s the strategy:
Target Zones:
- Wait for a move into the $900-$950 areas as these are places where selling can occur.
- Watch for a failure at those levels to make this a good shorting opportunity.
Entry Plan:
- If SMCI breaks up to $900 or $950 and can’t remain above those levels for the remainder of the day, short against the high of the day.
- Take a target move down to $850 for the first take-profit.
Exit Plan:
- Trail this position off using lower highs on the 15-minute chart.
- Final exit should be a break down below Friday’s low near $800.
Overextension Bounce Play
Overextension to the downside can also be used as a way of alternative entry into SMCI:
Conditions:
- Watch for a gap down into the $700-$750 range or steady selling pressure below $700.
- Look for increased volume and strong price action away from the lows.
Entry Strategy:
- Once there is a higher low off of the initial bounce, enter a long position and place a stop below the higher low.
Profit Zones:
- Take the trade up to the intraday VWAP as the initial profit zone.
- Trail the position on a 5-minute timeframe and exit as the stock makes new intraday highs.
Top Swing Trading Idea #2: ARM
ARM presents a clean breakout or breakdown opportunity after days of tight consolidation following its post-earnings move.
Breakout Plan
Conditions:
- A breakout above Friday’s high near $135 with strong volume confirms the long setup.
Entry Plan:
- Enter above $135 with a stop just below the breakout level.
Target Zones:
- Look for a continuation move of 1 ATR, targeting $150.
- Trail the position using higher lows on a 5-minute chart.
Breakdown Plan
Conditions:
- A breakdown below Friday’s low near $120 with strong volume confirms the short setup.
Entry Plan:
- Enter below $120 with a stop just above the breakdown level.
Target Zones:
- Look for a continuation move of 1 ATR, targeting $110-$108.
- Trail the position using lower highs on a 5-minute chart.
Key Lessons for Swing Trading Success
- Review Old Trades: Reflect on what was done right and where you went wrong in past trades.
- Set Up for Catalysts: Watch for market-moving events like earnings reports from semis like Nvidia and assess the potential broader market impact.
- Be Disciplined: Do not trade on the whims of emotions. Use only your A+ setups with clean and well-defined risk vs. reward profiles.
- Leverage Support, Resistance, and Volume Patterns, Trend Lines to Enter and Exit Positions.
- Risk Management: Always trade with defined stop-loss levels and position sizes that fit your risk tolerance.
Conclusion
The key to consistencies in swing trading lies in the disciplined execution of well-thought-out plans.
The ideas in SMCI and ARM this week show how powerful it is when technical analysis gets combined with strategic thinking.
This will prepare you for critical market catalysts, make you selective with your setups, and navigate markets with confidence.
Keep an eye on the overextension of SMCI or the breakout potential of ARM—remember to trade with a plan, risk management effectively, and continually refine your approach.
Good luck for the week ahead, and may your trades bring consistent success!