Swing Trade Watchlist: Week of Oct 14, 2024

Welcome to Pullback University—your go-to guide for identifying top-tier swing trade opportunities in the upcoming week. This edition provides a detailed breakdown of key sectors, ETFs, and individual stocks that show potential for profitable pullback trades. The analysis below is based on insights from our weekly watchlist and strategic trade setups to ensure you’re prepared to execute your trades with confidence.

Watchlist By Sector:

1. Metals and Mining Sector

ETFs to trade: XME
Strategy: Look for pullback entries early in the week for Freeport-McMoRan (FCX) and Alcoa (AA). Freeport-McMoRan offers more liquidity, making it a preferred choice.
Outlook: The metals and mining sector is showing strength over the past month. Focus on liquid stocks for better trade execution. Both stocks are trending bullish, but trade on weakness to catch stronger moves.

2. Semiconductors (SMH)

ETFs to trade: SMH
Strategy: Avoid trading semiconductor stocks like Nvidia (NVDA) until after earnings reports for ASML (Wednesday) and TSMC (Thursday). If trading, enter on Monday or Tuesday and exit before volatility spikes due to earnings.
Outlook: Earnings this week create a potential volatility event. Nvidia looks strong, but the entire sector could see big moves both ways, making early trades risky but potentially rewarding.

3. Energy | Oil Sectors (XOP | OIH | XLE)

ETFs to trade: None (But watch XOP, OIH, and XLE for continued strength)
Strategy: Focus on Exxon Mobil (XOM), which is trending bullish with higher highs. Look for pullback opportunities early in the week.
Outlook: Energy is showing signs of a comeback, with Exxon Mobil leading the way. The sector remains bullish over the last month, making Exxon a solid play for swing trading this week.

4. Industrials (XLI)

ETFs to trade: XLI
Strategy: Caterpillar (CAT) and Uber (UBER) are the top picks. Uber has better liquidity and cheaper options, making it a preferred choice for trading. Look for bullish entries on pullbacks.
Outlook: Industrials have shown steady trends. Caterpillar and Uber are leading within the sector. GE can also be watched but isn’t as bullish as the top picks. Overall, expect continued strength in this sector.

Here's the updated Communication Services (XLC) section with NFLX and TMUS added:

5. Communication Services (XLC)

ETFs to trade: XLC
Strategy:
- Meta (META): Bullish momentum, showing stronger trends than other stocks in the sector. Look for pullbacks early in the week for entry opportunities.
- Netflix (NFLX): Trending bullish. Look for pullback opportunities to go long, especially early in the week. Options are extremely expensive.
- T-Mobile (TMUS): TMUS is also in a bullish trend. Watch for dips to enter the trade.
Outlook: The Communication Services sector is generally bullish, with Meta, Netflix, and T-Mobile showing strong momentum. Meta leads the pack in terms of strength, but Netflix and T-Mobile offer solid opportunities as well. Focus on pullback entries to maximize upside potential.

6. Gold Sector

ETFs to trade: GLD, GDX
Strategy: Continue trading the same setups in gold that have worked over the past weeks. Look for pullbacks to enter long positions.
Outlook: Gold has been consistently bullish, providing solid swing trading opportunities. However, the sector may become crowded as more traders take notice. Proceed with caution but expect further gains in the short term.

Weekly News to Watch

Earnings Reports in the Semiconductors Sector
- ASML (Wednesday, October 16th) and TSMC (Thursday, October 17th) are set to report earnings, which will have a significant impact on the entire semiconductor sector, including Nvidia (NVDA) and other chip stocks.
- Strategy: If you’re trading semiconductors like NVDA, consider exiting before these earnings reports, as they are likely to cause volatility in the sector.
Fed Meeting & Economic Data Releases
- The Federal Reserve is expected to release key statements later this week, influencing overall market sentiment. Keep an eye on Fed updates, inflation data, and any economic reports that could affect market volatility across all sectors.

Pro Tips for the Week

Don’t Chase Trades: Wait for pullbacks to enter positions. Jumping in early, especially on high-flying sectors, can expose you to higher risks.
Focus on Options Liquidity: Avoid options with wide spreads. Only trade options with an open interest greater than 1000 contracts and manageable bid-ask spreads.
Use Limit Orders: Minimize the use of market orders to avoid getting filled at unfavorable prices.
Scale In and Out: Consider partial entries and exits to manage risk and optimize profits on volatile days.
Check Sector Trends: Always confirm that the sector trend is aligned with your stock’s direction.

Summary of Top Stock Picks:

Freeport-McMoRan (FCX): Bullish trend with strong liquidity; look for pullback entry on Monday.
Alcoa (AA): Bullish but less liquid than FCX; still a strong candidate for a pullback entry.
Exxon Mobil (XOM): Leading the energy sector with a bullish trend; look for early week pullbacks.
Uber (UBER): Bullish with better liquidity and cheaper options than Caterpillar; preferred in the industrials sector.
Caterpillar (CAT): Strong bullish trend but with more expensive options and less liquidity than Uber.
Meta (META): Bullish momentum in Communication Services; look for pullback opportunities early in the week.
Netflix (NFLX): Bullish but expensive to trade due to high premiums; watch for early week pullbacks.
T-Mobile (TMUS): Bullish trend with opportunities to enter on dips or pullbacks.
Gold (GLD, GDX): Bullish trend continues, but be cautious of the crowded trade; still a good opportunity.

This concludes this week’s edition of Pullback University. As always, stay disciplined and stick to your trading plan. Let’s make this week profitable! 💰📈

Disclaimer:

The information provided in this article is for educational and informational purposes only and should not be construed as financial or investment advice. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions. Trading and investing involve risks, including the loss of principal, and past performance does not guarantee future results. The author and publisher of this article are not responsible for any financial losses or damages incurred as a result of following the information provided.