Wealthpop

As you read more of these articles and watch more trade breakdowns, you may begin to see some reoccurring themes. In this case, it’s a reoccurring pattern and one we have seen several times across a handful of different stocks. Seeing patterns over and over again helps in two ways:

It familiarizes you with commonly traded patterns
Gives you the confidence to act the pattern when you see it

Northrop Grumman (NOC) has formed a pattern that we have seen a couple times recently, a head and shoulders pattern, which implies a reversal from up trend to down. A break of the neckline, currently sitting just above 460, would confirm the pattern. It is important to wait for the confirmation because we don’t yet know if this pattern will fully form. If it doesn’t break the neckline and it actually reverses in the opposite direction, then it isn’t much of a head and shoulders anymore, is it?
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And for even more about my favorite stocks, setups, and strategies, join my students and I in The Profit Machine. Every week, you will get exclusive access to all things option trading, from the stocks I trade the most, and the setups I look for when trading. The best part, you’ll receive all my trades every step of the learning process, so not only will you get a world-class education, but you’ll also earn while you learn.

Get a jump start on your options education and put yourself in position to win in 2023. Sign up today! Until then…
Good Luck With Your Trading!
Christian Tharp, CMT

ETF Watchlist
The market is still going through a section of chop with prices fluctuating around between tight price ranges. Without clear direction, it’s not worth forcing trades and to look for confirmations that aren’t there. That is not our style and it shouldn’t be yours if you want to be able to trade options for a long time.
The best thing to do in times like these is to study. Watch videos, read, get extra screen time, these are all things you can do to make your trading better. Just because you can’t put on a trade doesn’t mean there aren’t ways to get better.
When you take a step back to avoid getting chopped up, you can also take a breath, reset, and try to find other setups in the market without the anxiety of also having a trade on.
Energy Select Sector SPDR ETF (XLE)
The trade we have been watching for a couple days now, being patient with our entry, comes from the energy space. As oil prices continue to stall, and with the lack luster performance of the sector yesterday, we are now looking for some confirmation of a short play.
Should this sector continue to see weakness, the XLE should see declines that will only be accelerated if the price of oil also loses ground. Keep an eye on this bearish setup and be sure to watch the video below for more!
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My Smart Trades options trading service is where I teach my students how I trade options on some of the largest ETFs on the exchange. As you learn, you’ll get exclusive access to all my trades with notifications any time one is put on. Now, you can learn how many use this high-income skill to achieve financial freedom. Join today!
I look forward to trading with you, but until then, as always…
Good Luck With Your Trading!
Christian Tharp, CMT

When you get a clear and obvious setup, it tends to slow things down a little bit, allowing you the ability to better plan your trade. These setups, at times, can even make trading seem “easy,” even though we know that couldn’t be farther from the truth. However, this is exactly why it crucial to be able to spot the obvious patterns and setups.
These are the trades that tend to work out the best and give traders the highest probability of success. It’s an idea we have talked about a lot here, if you can see it plainly and obviously — so can countless other traders. Remember, we want to trade with the market, not against it.
Which brings us to our trade today. Workday (WDAY), after hitting key resistance at 192.5, now seems to be on its way back down to 182 as it continues to consolidate in its month-long rectangle pattern.
As you will see in the video breakdown below, this pattern is easily identifiable, which can lend to the illusion of it being easy to trade. While these levels can act as guard rails, you still need to plan your risk management in advance of the trade.
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And for even more about my favorite stocks, setups, and strategies, join my students and I in The Profit Machine. Every week, you will get exclusive access to all things option trading, from the stocks I trade the most, and the setups I look for when trading. The best part, you’ll receive all my trades every step of the learning process, so not only will you get a world-class education, but you’ll also earn while you learn.

Get a jump start on your options education and put yourself in position to win in 2023. Sign up today! Until then…
Good Luck With Your Trading!
Christian Tharp, CMT

A new week of trading is upon us and it appears the bulls are in full control for now. The windows of bullish and bearish moves seems to be getting smaller, but nevertheless have been coming in waves. With this newest bullish cycle, our trades have taken on a long view of the market, at least until we are proven otherwise.
The stock on watch today is Array (ARRY), which has formed an ascending triangle with a major resistance at $24. A break above should lead to much higher prices for the stock.
For the full chart breakdown and to find out how a trade on this stock could be made, watch my analysis below!
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Learn more about our favorite stocks and setups when you join my students and I in The Profit Machine. Every week, you will get exclusive access to all things option trading, from the stocks I trade the most, and the setups I look for when trading. The best part, you’ll receive all my trades every step of the learning process, so not only will you get a world-class education, but you’ll also earn while you learn.

Get a jump start on your options education and put yourself in position to win in 2023. Sign up today! Until then…
Good Luck With Your Trading!
Christian Tharp, CMT

Markets reversed higher on Thursday with a large amount of follow through Friday in a positive sign for anyone long the market right here. This coming week will be all about how long can the market push in this direction before a pullback occurs. The S&P looks to be in a the midst of a …

This Is The Next Big Level On Watch… Read More »

The market is looking bullish, at least in the short-term, so it’s time to look for some bullish trades should this rally hold. One trade we have on watch today is on a large tech company, a sector that should be at the front of the pack for any sustained rally. Let’s take a look:
Adobe (ADBE), after holding the 320 support level, pushed through both the 325 and 330 marks, which would imply an eventual run up to 350. Should this rally be held for today and into next week, look for ADBE to be our next high probability trade and to push through or to these resistance levels.
Check out the video below for the in-depth breakdown of this trade.
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Learn more about our favorite stocks and setups when you join my students and I in The Profit Machine. Every week, you will get exclusive access to all things option trading, from the stocks I trade the most, and the setups I look for when trading. The best part, you’ll receive all my trades every step of the learning process, so not only will you get a world-class education, but you’ll also earn while you learn.

Get a jump start on your options education and put yourself in position to win in 2023. Sign up today! Until then…
Good Luck!
Christian Tharp, CMT

Tesla (TSLA) held an “Investor Day” event on March 1 in what could have been one of the key days of the year for the electric vehicle giant.
It should also be widely entertaining as I expect Elon Musk to be flying high and in top form as he recently reclaimed the title of the world’s richest man thanks to TSLA stock price surging some 70% for the year-to-date.
Yet the stock price in the pre-market is down. Blame it on Elon, or the fact that his “Master Plan 3” he revealed, skimped on the details. Either way, it’s a good day to fill in investors on what’s going on, even if it comes with some of the typical Elon antics.
Some of the topics Musk addressed included Tesla’s long term expansion plans, the next generation platform, and capital allocation.
Back in 2006 Musk published his Secret Master Plan, which he summed up with these four points:

Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options. Tell no one…

Musk says they achieved part two in 2016, and, as expected, he discussed part three on Wednesday.
Part of reaching the goal of more affordable vehicles will be dependent on the development of “generation 3 platform,” which investors hope to get more details on in the future, they hope. Some are even hoping he will unveil a prototype for a new mass-market model.
The Cybertruck, a project that really has the market buzzing, was also discussed, including the chnages that were made in the latest “beta” version. Autonomous driving applications, energy storage initiatives, charging network revenue potential, and Tesla robot could all be woven into the master plan, as well.
Bulls will still be looking for more details about capital allocation with some even speculating about a potential stock buyback plan. Given the investment required to continue to scale and lower vehicle costs, the idea of a buyback seems far fetched to me, at least at this time.
Speaking of far fetched, the bears greeted the lack of details and met what plans Elon did lay out with a high degree of skepticism. They would like to remind people of the numerous times Musk has underdelivered, not just on price and unit volume, but the timetable of fully autonomous driving.
Whatever is presented at these events, it always forces other automakers’ hand. Both EV makers, Lucid (LCID) and Fisker (FSR), as well as legacy manufacturers such as Ford (F) and General Motors (GM) to sit up and take notice.
For my, and Options360’s part, we tried to take advantage of the pumped up option premium ahead of the event by selling an iron condor. The options are pricing in a 5.9% or $13 move over the next two days.
Options360 established the position over a week ago using the March 3rd expiration and strikes that are some $20 out-the-money; meaning if the stock remains within the expected range we should reap a very nice profit.
To learn more about this trade and the countless more like it my students and I put on throughout the year, you’ll have to become an Options360 member. But don’t wait too long…
Don’t miss out on being a part of our growing community… or miss the next trade. Join Options360 today!

The declines continue as the S&P 500 and Nasdaq Composite both finished down last week by 2.7% and 3.3%. This three-week pullback has been relatively shallow for the time being, while doing little damage to the technical picture. With both indexes still at or above their 200-day moving averages and the 50-day moving average still above the 200-day moving average on the S&P 500, this creates a positive development for the market.
However, while the short-term picture has improved since the January lows, this recent strength has not yet translated to an improvement in the bigger picture, with both indexes remaining below their 20-month moving averages.
The first confirmatory sign of this breadth thrust would be a monthly close above the 20-month moving average for the S&P 500, or around 4220, pushing the S&P 500 back onto a bullish reading.

(Source: TC2000.com)
Earnings reports made the major headlines of the week as Domino’s Pizza (DPZ) missed earnings estimates on weaker-than-expected sales results, while Nvidia (NVDA) and Alibaba (BABA) posting blowout earnings results, dulling the sting from misses in other sectors. While the Nasdaq Composite underperformed the S&P 500 last week 8.9% compared to 3.4%, offering a healthy sign to investors.
As highlighted in past updates, we saw a very rare breadth thrust (only 27 prior signals since the 1940s) on January 12th that triggers when the advancers/decliners ratio (summed 10-day average) goes above 1.98, which takes extreme buying pressure to occur. This signal has a strong track record with positive returns 88% of the time over the next 12 months, a 16% average 12-month forward return, and no undercuts of a previous major low (3500 in this case) over the next 6 months.
Sharp pullbacks in the S&P 500 are possible and often occur during the first three months following breadth thrusts. However, they are typically brought up near the 9% decline mark on the S&P 500 if they do decline to this magnitude (current pullback at 6%). 
So, if this pullback reaches the ~3800 level, this would stack the odds sharply in favor of the bulls. I have shown statistics on the historical performance of all breadth thrusts below, and as we can see, historical performance would suggest a high probability that the S&P 500 heads to at least 4400 and up to 4650 by year-end.
So, What’s Next?
Following the sharp pullback last week, the S&P 500 has dropped below the midpoint of its short-term support/resistance range (3765 to 4315), and has a current reward/risk ratio of 1.68 to 1.0 based on 205 points in potential downside to support and 345 points in potential upside to resistance. This reward/risk is still below the 5.0 to 1.0 or higher reward/risk ratio I prefer to justify going along the index, but as noted in past updates, I am already long the S&P 500 from ~3920 following the breadth thrust.
If the S&P 500 were to decline below 3800, where it would trade in the bottom 1.5% of this range, I would view this as an opportunity to top up exposure a little, and this would also offer a favorable area to add more exposure to individual stocks, assuming one is rigid with stock selection. This means focusing on the best businesses that ideally have strong balance sheets and are generating free cash flow given that these companies can be opportunistic if things get ugly, either defending their stock by buying back shares or through M&A transactions.

(Source: TC2000.com)
For now, I continue to see patience as the best course of action and I continue to hold 30% cash while remaining 70% invested.
That said, I have been taking some profits in names that have significantly outperformed the market, including taking additional profits in Crocs Inc. (CROX) highlighted at $75.40, Builders FirstSource (BLDR), which was highlighted at $57.90. I have also exited my position in Dutch Bros (BROS) which was highlighted at $31.95 for a small gain, a name where the investment thesis is deteriorating a little following results that continue to miss my expectations. In this week’s update, we’ll look at a small-cap name in the Leisure Products industry group that recently cut its FY2023 guidance, but this looks more than priced into the stock at a low single-digit PE ratio.