Although Good Kids Trading GKT is mainly focused on option trading using math and probabilities we differentiate ourselves because we also look at the charts. We believe there is value in technical analysis as each candlestick on the chart represents price action during that time period. Many day traders use charts for smaller timeframes however at GKT we like to look at the bigger picture. Get a higher level perspective if you will.
Today is February 1st, so we have new monthly candles. I want to review some interesting charts that I'm watching. It doesn't mean I'm going to take a trade, these are not Guaranteed winners or the easiest trade ever, but they are just another input when you are working on building a trading thesis and looking for check marks on building high probability trades.
The S&P500 reached all time high’s in January, yes there was some profit taking as seen in the upper wick, but we still have a pretty powerful monthly candle. As you see on my chart I like to look for Elliot Waves, although I’m not nearly perfect in following the theory GKT discord members know I post the 4 and 5 wave count before the candles appear. Not always right, but it’s just another indicator to help me build a trading hypothesis.
QQQ closed the month at all time highs as well! I zoomed out on this chart because look at the huge run we’ve seen in the tech sector. It’s very hard to call bottoms and tops, there was lots of talk of a double top on the QQQ’s but remember stocks don’t normally go straight up, so when you see a pullback and you see a possible double top forming, this doesn’t mean you change your entire bias. You just get a little more cautious until you see the trend get broken. We broke right through that bearish trend line.. Pretty bullish so far, although we still have some earnings to get through!
Here are a few interesting monthly charts
DKNG- The super bowl is coming up, not quite a hammer last month, but this chart looks like it could go a little higher. I would love to see it close above the blue line I have drawn which has been previous support and resistance on the daily charts.
CVX- we are seeing some consolidation on the monthly chart with the 10ema acting as pretty strong resistance. I think if we can get a close above the 10 we could see a little bullish pop in CVX.
CBRL- this chart looks bullish to me. January's hammer candle right on the 200 monthly moving average. Look for a nice bullish move if we can close above the 10ema
TGT- you know what's cool about tiny candles, this signals consolidation. the longer and tighter the consolidation the bigger the move usually is generally speaking. Look for a close above the 50EMA to go bullish on Target.
None of these are trade recommendations, they are insights into how I think about trading and setups I'm thinking about. Don't totally write off the charts thinking you have to sit and watch them minute by minute. Zoom out like me, these only update every month!
If you want more information you should join the GKT discord to discuss more and connect with like minded people who trade the stock market! I hope this article was valuable to you. We want to help educate and show you trading doesn't have to be complicated, and you can do this.
Happy Trading Good Kids!
Disclaimer: this is NOT financial advice. I’m basically just some dude on the internet who’s been trading a while, and I use the stock market as my primary source of income. None of this is financial advice it’s purely educational!