≈ This is a must-have for short-term traders ≈

We are continuing our brief exploration of moving averages with a look at the popular 20-day simple moving average (SMA). Consider it the go-to benchmark for identifying the short-term trend. The strongest stocks will be rising above it. When prices fall below the 20-day, it’s not necessarily a trend reversal but a weakening of the trend.

Please note where the 20-day sits when analyzing the bull retracement patterns in our weekend Scouting Reports. Occasionally we’ll include an uptrending stock that’s pulled below the 20-day, but it’s not common. Most buy the dip opportunities will find buyers above or at the 20-day. It’s a hot spot for bulls to gather when waiting to join a trend.

It allows them a lower-risk entry on a stock that was recently too high to purchase.

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Chart of the Day

Caterpillar Breakout

Caterpillar is breaking out on Wednesday.  It has been in a high base pattern, with the 20 SMA trending upward. It was also a candidate on this week’s options report.  Review the full report here: https://tackletrading.com/options-report-january-2nd-2021/

Video of the day

Analyzing DKS as a potential Covered Call

Coach Emily discusses a potential Covered Call trade in Tuesday’s Halftime Report in this video clip.

Traders Lounge 11 AM EST

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The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

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Join us for a special webinar with the coaches where they’ll analyze some trade setups.

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Join our monthly mastermind group for students of the STEP System.

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