06/24/2022
I apply a lot of famous movie scenes to what I see in the financial markets.
Weird, I know…
But when I’m at the trade desk, I will typically have a movie playing on the TV mounted in the corner of my office.
This week? One Flew Over the Cuckoo’s Nest and, just yesterday, Reservoir Dogs…
And I couldn’t help but notice an uncanny parallel to where we’re at today with the famous “Mexican Standoff” scene between Chris Penn, Harvey Keitel, and the late Lawrence Tierney:
(Source: gfycat.com)
It doesn’t end well…
The parallel here is with the three mentioned above and Tim Roth (not pictured) who is lying on the floor after being shot as the others duke it out.
The market participants in the standoff: The Fed, institutional investors, and the banks.
“What about retail?”
That’s Tim Roth.
Not one of these groups is prepared to pull the trigger and because of this, money is on the sidelines while retail attempts to make sense of it all and continues its struggle to stay alive.
Frankly, the only survival play right now is short term “safe” bets until there’s more clarity…
For a short term trade, I’m looking at Traeger, Inc. (COOK):
This is the 65-minute chart over the last month…
Like I said, short term.
Badly beaten stocks are a joy to trade and this is one that may as well be in a full body cast.
But it’s starting to heal up.
This likely trading higher off of Weber, Inc. (WEBR) as a sympathy play, but if you keep a list handy of industries that are prone to run whenever others do, you can catch them early.
Now, the Standard Deviation Channel shows that COOK has punched through the second standard deviation to the upside.
Typically, this is a sign that a retracement is due, however, with all things in technical analysis, you have to look at other indicators and signals…
Take a look at the lower chart where the Volume has spiked.
I’ve also marked with white arrows where Resistance has now turned into Support (green horizontal channel) and there’s plenty of space to the upside.
A tentative level to watch for now is the top of the white box at the upper and of the Value Area of the Volume Profile off to the right where demand gets thin at the $5.00 mark.
Go figure.
Finally, on the Squeeze Trading Tool 1.2A from Chris Hood, all signals are green.
I like the idea, but be careful on sizing… If volume disappears, this thing could crash quickly.
(Disclosure: I hold no position in COOK.)
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