This allows me to identify the support and resistance levels of the stock to make a determination about how a charged fractal energy will impact the stocks new trend.
In this situation, it’s all about the 52-week low and the Fractal Energy.
Because the 52-week low is a major physiological trading level for every investor and trader. And there are a lot of buyers at these levels, which can cause a stock to reverse direction with a lot of momentum.
And the Fractal Energy is telling me that buyers are piling into the stock as the values climb above 60.
Once I saw this I knew I had to get into the trade.
So I placed this trade on ET and my subscribers were the only ones to find out about this trade
ET – I sold the Jan ’21 $5 put for $.50
So I decided that I was going to sell the puts for $50 per contract and alerted my members.
And then I added a spread trade to this as well in order to double up the returns of the stock without taking massive downside risk.
ET: I sold the Jan ’21 $5/3 put spread for $.40
Recently I closed both of these trades out for nearly 100% profits each.*
You seem, by trading options, even if the stock went up, down, or sideways – I could make money on this trade with almost anything that the market threw at it.
Recently, I’ve locked in gains on those two trades.
And if you were to buy the options or the stock, you would have possibly been stopped out by the choppy nature of the markets.
Now if you sold the spreads, you would have made up to 100% returns on your trades no matter what direction the stock went in.
And when the Fractal Energy got to the elevated levels, I strongly suspected that the stock was about to take a leg higher.
Which it did!
But you see, I don’t always know the direction the trend is going to head in… which is why I turn to technical indicators to give me that heads up
The Bollinger Bands are a frequently used technical indicator that gives me an idea of where the stock wants to head in.
Now the Bollinger Bands act as the ropes in the boxing arena, where they push the stock back into its center.
And when you combine credit spreads with the power of fractal energy and technical analysis, you can get the trifecta – winning combination on your hands, in my opinion… if you know how to use it to your advantage.
It’s a strategy you don’t want to miss out on learning.
And, it has recently targeted three electric vehicle stocks that momentum traders have been chasing for months…
Three EV Stock You Can’t Miss That Are On My Radar
If you haven’t heard the news yet… EV stocks are the craze.
And traders and investors can’t get enough of these stocks if green energy is going to be the focus of the next four years.
Now, I don’t want to just trade stocks or buy options… that’s almost a guaranteed way to lose money.
It’s just too risky for me to do that.
What I think I’ll do is stay patient and wait for the stocks to come to me.
And that’s what happened over the last few weeks.
I’ve had these three names on my radar for some time, and now I think they are finally starting to come closer to being traded.
Of course, I don’t plan on trading these stocks right now… but they are on my watchlist and I think they deserve to be on yours too.
Let’s take a look at the price action and see why I think these stocks are ready to pop soon.
NIO INC ADR (NIO)
Let’s start off with NIO and see what the price action is telling me about this EV stock.
Honestly, I never got into this crazy in the beginning.
But now with all of the traders speculating on which direction NIO will be heading lately, I think I might want to dip my toe into the water a little bit.
So, what I see happening here is starting to catch my attention.
NIO has not fallen to a level of support since September, when it had fully charged Fractal Energy, managed to run 225% higher!
Now, I don’t have any magic 8-ball and I can’t predict the market… But I do like to take a good trade when I know the Fractal Energy and Bollinger Bands are showing me something worth taking.
And that’s exactly what is happening in NIO right now… But it’s not quite down to the lower Bollinger Bands just yet, so I will be keeping this on my radar for now.
Then once I see the perfect setup, I’ll be trading one of my favorite strategies – a credit spread in order to take advantage of the suckers who are buying expensive options or stock.
LI AUTO INC ADR (LI)
In this same sector, LI is a stock that recently IPO’d, and is back on my radar after it’s run higher in October.
Take a look at the highlighted areas of the chart.
LI was getting ready to break above prior highs as it was trading against the center momentum moving average of the Bollinger Bands…
And the Fractal Energy was fully charged for the first time in the stock’s trading history.
Unfortunately, hindsight is 20/20 and now it looks like a trade I should have been involved in but I never took the trade.
But that’s ok!
Just because I missed it one time, doesn’t mean I’ll miss it next time.
So instead of chasing the stock higher now, I will just wait for my next opportunity to attack and trade it higher in the next leg.
WORKHORSE GROUP INC COM (WKHS)
Another stock that is in the same sector as the other two which got a lot of attention lately is Workhorse, WKHS.
And for good reason.
WKHS is another stock that joined the 1500% gains club this year.
But, with a stock moving like that, I definitely think it’s best to trade options instead of the stock itself.
And I’m looking for a specific pattern that I can take advantage of.
This pattern is a support or momentum pattern combined with a fully charged Fractal Energy (FE)
Just take a look at how WKHS reacted at 3 of the most recent fully charged Fractal Energy
Now, right now the stock doesn’t seem to be at either a major support level or setting up a momentum trade.
But what caught my attention was the build up of the Fractal Energy over the last few weeks.
And it’s not fully charged just yet, but what I would like to see is WKHS start to trade down to its lower Bollinger Bands while the Fractal Energy sustains a fully charged ( value > 60 ) reading during that time.
Then once that occurs, I’ll be watching the price action to decide if I want to trade credit spreads on this stock.
You see, right now I don’t plan on taking any of these 3 trades at the moment… but this could change
But, for now, I’ll sit and wait as I stalk these stocks for a trade.
Now, this is just one pattern for finding trades that I have in my trading arsenal.
Plus, once I find my trade, there are many different credit strategies that I have in my toolbox to choose from as well.
And in my opinion, credit strategies are a great way to put the odds of winning in your favor and boost your returns over simply buying stocks.
So with that said, right now, price action is what’s working.
And if you can identify them, I believe it’s possible to land more consistent returns
Plus, price action can help you plan your trades and get your thumb on the pulse of a stock before putting your capital to risk.
Now… make sure you sign up for Energy Trader here and let me show you how you can use Fractal Energy combined with Credit Spreads to put the odds of winning in your favor, and why it can help you become a better trader.
One way to uncover these plays is to identify where the momentum will hit, and execute the trade, and wait for the fireworks to go off.
Of course, with Janet Yellen potentially leading the Fed again, there will be momentum opportunities popping up everywhere.
You see, with so many stocks to trade, you need to have a way to filter out what you want to trade and where you have an edge – and buying stocks randomly is not a strategy you want to even think about…
Why This Momentum Could Signal Huge Gains For 2021
There are many catalysts coming up in 2021, but the presidential election and change of power is in the spotlight. You see, a lot of traders are eyeing more stimulus to boost the economy.
And now that Jannet Yellen is joining in on the fun, I think we are going to see a record-setting year.
But what does this mean for stocks.
With this type of cash being thrown into the markets, it means they are going to the sky. And some of the best opportunities are going to be found in stocks you would least suspect.
Of course, you’re probably thinking, “Dave… how do you actually uncover these trading opportunities?”
I think it’s actually pretty simple.. Let me explain
Every day, I use a screener and filter for stocks to potentially trade. For the most part, I am looking for stocks that match my favorite Fractal Energy and Bollinger Band setup.
If you look above, it’s not a lot of names.
You see, there are only 100 names for me to look at on here instead of trying to go through over 25,000 stocks that trade in the US Equity markets.
But sometimes the best opportunities pop up from trades that are not even on a single stock, but instead the market index.
And what I spotted looks to be a once per year opportunity.
SPX – WHY I TRADED THE MARKET INDEX
Now, I am sure you’re a bit crossed at this point, thinking…”why are you even trading a market index instead of a stock?”
You see, the market is sometimes a better signal of what’s going on compared to a single stock.
Many times a single stock has too much “noise” or what’s known as, “single stock exposure” to make it worth trading.
But when you trade a market index, you cut through all of that BS and only focus on true technical patterns without any of the single stock risk factors.
Just check this out.
You see, the stock market has been trending higher after the market collapse from COVID earlier in the year.
And it finally got back to market high from almost 1 year ago !
But what really caught my attention was the Fractal Energy reading… where it was charged and ready to start the stock trending.
Now, I don’t know what direction the market is going to head, but what I do know is that the internal energy of the markets is very night right now, and this pattern that is setting up has the smell of a breakout written all over it.
Which is exactly what I was looking for in my recent SPX trade that I took this week.
In this chart, you can see a similar pattern.
Once the Fractals get charged, the stock starts to trend higher after the energy is released.
And this is the action that I anticipated in the markets and led me to set up my SPX credit put spread
Now, in this rare circumstance, all three markets are showing a similar pattern.
Coincidence that it’s aligning with the change of power and the QE and COVID relief funds that are coming up next year?
You see, the markets are smart, and this is setting up to be one of the most explosive years in the record books.
Now time will tell, and I’m just speculating that the Fractal Energy is going to release higher… but I like my odds with how this is going to play out.
So if and when I decide to trade any of the markets again based on Fractal Energy, I’ll be sure to send out an alert to my Fractal Energy subscribers.
They will receive instant alerts for when I enter a trade and exactly how I’ll be structuring my spread.