It Only Takes One Good Setup

“This sucks. Where are all the plays?”

I hear traders say that every day. It’s getting a little repetitive. So, I want to remind you that it only takes one. You don’t even have to spend hours a day watching candlesticks…

“It’s the most explosive 15-minutes of the day. Trade it!” – Tim Sykes

The Big Picture

People think it’s bad when there aren’t 500 setups.

It’s a discussion we often have where people get used to a busy market. Then, when the season changes, they’re crying because 500 stocks didn’t move.

I prefer fewer setups.

Why?

All It Takes Is One

When there are too many choices, it’s easy to get distracted. That comes from 22+ years of trading experience.

I look for one to three setups every day. That’s it.

Now, you probably know that my Oracle algo identifies the 10-20 most volatile stocks every morning. That gets the list down from 12,000+ stocks to a manageable list.

But even after 22 years, I can’t watch and trade 10 stocks (let alone 20).

So, we narrow it down to around 5. That’s enough to watch.

How do you narrow it down?

Look for Patterns

Remember, we don’t trade stocks … we trade patterns. So, the first thing I do to narrow it down is look for a recognizable pattern setting up.

Then, we look for:

• A catalyst
• The float
• Trading volume
• Recent trading history…

Now, does that mean I don’t look at any other stocks the rest of the day?

Of course not. That’s not how trading works. But it narrows things down to an easy-to-manage list of potential trades.

I watch for other setups later in the day. My other algos look for specific setups, too.

But if there’s only one… yeah, buddy. I can focus on the trade plan and my execution without a bunch of alerts going off.

My Take

Be careful what you wish for, okay? Now, I’ve been saying for the past couple of weeks things would pick up after Labor Day.

So, why aren’t there 500 plays a day? Oil and Iran. Put the Iran situation to bed, and we probably get a rate cut. Then the market rips.

In the meantime, you still only need one. But you have to be up and ready and have a plan.

Watchlist

Tenon Medical, Inc. (NASDAQ: TNON) announced “early repayment of convertible notes” on Wednesday (Sept. 9).

TNON spiked during premarket on Wednesday but gave it all back. It turned the corner in after-hours trading.

Yesterday, it was one of my tops and hit the signal at $4.38 early. After it pulled back, it triple-tapped the signal before squeezing shorts in the afternoon. I like the way it settled into consolidation around $5.22.

If TNON is still hanging around in premarket today, it could provide more opportunities. That said, remember to look for a real setup (one you can name) and make a trade plan.

On My Radar

• 25 years ago today. We will never forget
• Everyone’s talking about the new iPhone
• Personally, I’m most excited about the new Mac Studio
• Apple (NASDAQ: AAPL) was the watchlist stock on Monday
• Ben Sturgill’s 2-day bootcamp is filling up fast (reserve your spot today)