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Bridging indices and equities

One of the things that we like to do when we’re looking at the index futures is to look at the names within the futures contracts, Gang.

And that doesn’t necessarily mean looking at the individual stocks, for example within the QQQ right? Because that would be reflective of what we’re looking at in the NASDAQ.

So sometimes we will take a look at it from the sector level, like this…

STEP ONE: Strength in the NASDAQ

Now clearly we’ve seen strength in the NASDAQ: the top 11 heaviest weighted names are all heading higher in what I call the ‘double green markets,’ the 8 is above the 13, the 13 is above the 21, and price action is above the 34 EMA high close and low.

But as I said earlier, Gang there’s another way to take a crack at this market…

Looking at the particular sectors within the NASDAQ.

STEP TWO: Dollar General

That of course is tech — but also the communications and discretionary sectors. Now this next part is important, so then as we continue to see opportunities to play, not only on pullbacks in the sector, but also in those individual stocks when they present pullbacks.

And I feel like this is very much in line with what I would look at in terms of being a futures trader… Like looking at Dollar General in the NASDAQ.

Now you might be saying, “Dollar General? Really Ragh?”

But let me walk you through the setup, and you’ll see what I’m talking about. This about it this way…

NQ plus the discretionary ETF (XLY), then to a top 10 (top 11 in this case) weighted name in Dollar General (DG)… then a pullback buy to the 34 EMA on the high — all things I mentioned at the beginning just with a different approach, Gang.

And that’s exactly what I mean when I say ‘crack open the index.’

STEP THREE: XLC, XLY, and Tech

But what about other sectors, with setups that haven’t taken off yet?

Well we’ve been bullish XLC, XLY, and tech for coming up on a month now, so let’s take a look at them to see if there’s some opportunities with pullbacks.

So in order to do that, what’s our criteria?

  • 8 above the 13
  • 13 above the 21
  • And price action above the 34 EMA high, low close

One that fits that? EA, while not my favorite, we’ve pulled back before and this is actually my second buy in EA. One that’s not as promising? Netflix. Simply put, there are much better opportunities out there that fit the criteria.

Maybe take a look at Google…

If Google pulls back to the 21 exponential moving average, I’m game. What about you?

1 thought on “Bridging indices and equities”

  1. Raghee, I have so much to learn! I’m happy to have found you. My trading over the years has been more like Donating!
    at 60, with no pension and currently unemployed, I really need to focus and turn things around. I joined the futures room for the $7.00 and look forward to your help in turning around my future.
    God Bless you and Thank You!!!!!

    Reply

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