Technical Analysis - Weekly Recap - February 8, 2025

The team discussed trading strategies and experiences, with a focus on long-term investing and continuous improvement. They analyzed the weekly technical outlook, sector weightings in the S&P 500 index, and the performance of various sectors and stocks. The conversation also covered trading strategies such as selling premium in options trading, the importance of confirmation and volume analysis, and refining strategies for specific stocks.

Next Steps

Review trading rules with group members to improve discipline and consistency.
Monitor Boeing stock for a potential breakout above $194 and a larger cup pattern formation.
Watch for AMD stock to potentially reach support levels around $95 or $80–$85.
Track Palantir stock for a possible pullback to support levels at $84 or $81.
Watch BigBear.ai stock for a potential gap fill between $5 and $5.50.
Review and adjust portfolios based on sector performance, particularly noting strength in financials versus weakness in technology.
Research and provide updates on Chinese sales figures for Tesla.
Monitor potential changes to EV infrastructure policies and their impact on relevant stocks.
Execute the covered call strategy on Crocs stock as discussed.
Continue the TastyTrade options course and share the link with group members interested in options trading.
Organize a Saturday session to discuss options trading concepts and strategies.
Analyze the performance of technology stocks, particularly FAANG stocks, given their underperformance relative to other sectors year-to-date.
Continue monitoring and analyzing stocks discussed in the meeting, including PLTR, SMCI, and VRT, for potential trading opportunities.
Research the supply chain for Archer Daniels Midland, particularly the company mentioned starting with "H."
Wait until Tuesday to see if Crocs stock shows signs of bottoming before entering the covered call trade.
Provide more details on managing downside risk for the Crocs covered call trade.
Explore setting up an options course or training session for the group.
Review and discuss McDonald's chart pattern as an example of entry and exit points for trades.
Share real trade examples, like the GE trade, to illustrate decision-making processes.
Pay closer attention to volume, gaps, and confirmation patterns when analyzing potential trades.
Research and share information on options simulators for practice.
Provide further details on the covered call strategy for VSAT stock.
Review and update options information for CROX stock in published materials.
Look into obtaining a list of stocks purchased by members of Congress.
Send Brandon the list of congressional stock purchases if he is unable to find it.

Summary

Technical Analysis and Market Trends

The team reviewed weekly technical analysis, focusing on the Dow, Nasdaq, Russell, and S&P 500 indices. The Dow and Nasdaq showed slight gains, while the Russell and S&P 500 saw small declines. Increased market volatility was reflected in the VIX, which had been rising over the past 10–12 weeks. One member suggested using inverse ETFs as the market approached a resistance level. The energy and communication sectors showed positive movement, with potential opportunities for reversals in energy.

Sector Weightings in the S&P 500 Index

A discussion on sector weightings in the S&P 500 divided them into three tiers based on market impact:

Top Tier: Technology and financials.
Second Tier: Consumer cyclicals, healthcare, communication services, and industrials.

Despite technology’s year-to-date decline, financials, healthcare, and communication services performed well, helping maintain overall market strength. Understanding these weightings was emphasized as critical when interpreting market movements.

Sector Performance and Trading Strategies

The team analyzed various sectors, including technology, consumer staples, real estate, utilities, healthcare, and consumer discretionary. Technology was trading within a range, consumer staples showed mixed performance, and real estate was identified as a potential breakout candidate. Participants also discussed trading strategies for major stocks, including Apple and Nvidia.

Tech Stocks Analysis and Entry Points

The team reviewed tech stocks such as Amazon, Google, Meta, Netflix, Microsoft, and Nvidia. Observations included:

Google: Potential entry point around $172–$175.
Netflix: Strong recent performance but a missed buying opportunity.
Microsoft: Support levels analyzed using monthly charts.
Nvidia: Possible bounce or a new trading range between $115 and $124.

Stock Performance and Investment Strategies

Tesla, AMD, and Broadcom were reviewed. Tesla’s performance was impacted by recent negative news, while AMD was considered undervalued with potential for long-term gains. The financial sector, including JPMorgan and Citigroup, was also analyzed. A possible cup-and-handle formation in AMD was noted.

Stock Market Strategies and Experiences

A discussion covered stocks such as Palantir, Boeing, ELF, Crocs, Nike, and Cloudflare. Strategies included:

Holding stocks with strong uptrending charts and sectors.
Avoiding excessive volatility.
Setting stop-losses to prevent significant drawdowns.

Crocs Stock Trading Strategy Discussion

A covered call strategy was proposed for Crocs, involving:

Buying 300 shares.
Selling a covered call at a $97.50 strike price (expiring February 21).
Expected return: 4% in two weeks or a $7 per share gain if called away.

The trade was considered a strong setup with favorable risk/reward.

Exploring Premium in Options Trading

The team discussed selling premium in options trading, focusing on covered calls:

Strategy involves buying stock and selling a call option to generate income.
Rolling up/down in options trading was explored, with the costs and risks associated with rolling up noted.
A plan was made to further explore options trading through a structured course and paper trading before committing real capital.

Stock Trading Strategies and Volume Analysis

Confirmation and volume analysis were discussed as critical components of trade execution:

Identifying bottoming points and confirmation days for entries.
Importance of risk management and waiting for solid green candles or established bottoms before entering trades.
Strategies for placing limit orders at better prices for improved fills.

Improving Trading Strategies and Analysis

The team discussed refining trading strategies, particularly for options trading. Key takeaways included:

Chart analysis for Walmart, Target, and McDonald's to identify optimal entry points.
Recognizing preferred trading patterns such as the hammer and flush.
Considering overall market conditions before making trades.

Stock Analysis and Trading Strategies

The discussion covered stocks such as GE and VSAT:

Earnings reports and growth potential were analyzed.
The influence of government contracts on stock performance was noted.
A covered call strategy was suggested for VSAT, though skepticism remained.
Further analysis was planned via group chat.

Final Notes

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Technical Analysis - Weekly Recap - February 8, 2025