Momentum traders are spoilt for choice in the current market! With the overall market trading at all-time highs and various sector ETFs trading at highs, many small, medium, and large-cap stocks continue to break out across multiple time-frames.

Friday was no different. The morning session of trading on Friday offered fantastic trade opportunities. These opportunities allowed traders to profit on both the long and short sides and took shape in various types of stocks.

This environment is ultimately brilliant for new traders who are looking to enhance their skills and knowledge! 

I want to go over two A+ setups in two different stocks from Friday.

Setup 1: The Momentum Long In KXIN

Kaxin Auto Holdings (NASD: KXIN) gapped up Friday morning on news that it was to create an energy vehicle business unit.

Float: 18.27m

Market Cap: 233.27m

Average Volume: 545k

ATR: 0.11

Short Interest: 1.7%

KXIN provided many opportunities on Friday morning on the long side. Clear-cut and defined setups, offering substantial risk: reward. Now that’s what I look for in trades!

The first momentum trade opportunity was after the stock took out the morning high on the increase in volume (1 circled). After trading light volume off the open, the stock sharply pushed above the morning high on rapid volume growth. That price action provided the opportunity to go long with a stop placed below the morning consolidation (marked X). 

The second opportunity came after the initial leg higher when the stock-based at the highs and volume dropped off. After spending ten minutes consolidating at the high, volume again picked up, giving momentum traders another opportunity to ride the momentum higher. 

The time to go long with a stop placed at X is when the volume comes in, and the stock breaks above the consolidation. 

The third setup is my personal favorite. It is my favorite for several reasons. First off, the stock has now shown me that it is firmly in control by the bulls. This gives me added confidence on the long side. Secondly, the stock has set up a bullish pennant at the highs, offering another great risk: reward opportunity. The signal to go long is as soon as the volume increases, and resistance is broken. At that point, the stop is placed below the trendline, marked X, and the position will be closed out on a significant move higher and/or a trendline break.

Setup 2: The Momentum Short in HOOD

Robinhood Markets (NASD: HOOD) has been wild, to say the least, since going public. On Friday morning HOOD presented momentum traders with two brilliant entry points for the short. A head and shoulders breakdown, and a break of the consolidation at the low.

Shares Outstanding: 835m

Market Cap: 42.59B

Average Volume: 85.86m

ATR: 13.84

The Head and Shoulders Short:

The pattern was so evident in HOOD, with a clear neckline (support) of $56.60. Overall, if a stock has downward momentum and presents itself with a head and shoulders pattern, there will probably be momentum once support breaks.

The entry point is straightforward with this setup. As soon as the support is broken, a short position will be initiated. In this case, I would have my stop close to my entry point as the neckline break is a significant inflection point, and momentum should sharply push the price lower. In this trade, I would either be taking profits on the initial move lower, or I would wait for a reason to sell. In this case, that reason was the buyers stepping in briefly and the resistance of the minor consolidation being broken (marked x).

Break Of The Consolidation At The Low:

Mid-morning on Friday, HOOD spent over an hour consolidating near the low. This is a bearish sign. It is a great setup that presents a superior risk: reward. The signal to short is when the stock breaks below support and makes a new low, at $55. At that point, a short position has been placed and the stop is placed at resistance of the bearish flag (marked x). As this is a momentum short, the position will be closed as soon as buyers step in. Volume increased, and buyers stepped in at $53.50, ultimately providing a reason to close the position.