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As traders, we often become frustrated after putting in the necessary work to identify high probability setups, only to see the market not accommodate us by following through and hitting our price triggers. Today was a pretty good example of that phenomenon, as there were quite a few enticing setups walking into this week. However, an exogenous event like the Standard & Poor’s downgrade threw a wet blanket on those setups, at least for today.

Looking over how many of those setups fared, I think you will find that the selling was not quite as damaging as it seemed this morning. Indeed, most of those trading ideas that I pointed out to 12631 members yesterday (Don’t forget, Free Trial All This Week to 12631 for PPT Members Only) saw no heavy selling volume today, and their favorable chart patterns are still intact.

While today may have been a good day to take a wait-and-see approach and hold off on making aggressive buys, considering most of those setups held up exceptionally well, I think we come back tomorrow and look for the bulls to take another shot at those trades. With the 1300 level on the S&P 500 holding true, the bulls have at least earned a mulligan.

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Tickers Mentioned: BECN DD DOW GRA HUN LVS MGM PCL ROC SXT WY WYNN

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Three long ideas. See notes on chart.

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As I have been discussing in my recent video market recaps, if the market is going to emerge from this choppy period and commence a fresh leg higher, it is bound to be much more of a stock picker’s market. As the bull matures, capital tends to rotate out of the previously obvious winners towards sectors that may have lagged heretofore. The coal sector is one area that I have been watching closely, as money may come out of some of the frothier oil services names.

Another group of stocks that are rather blatantly under accumulation (heavy buying by institutions) are communications equipment firms. Even during last week’s broad market volatility, especially on Friday, this sector displayed unbelievable relative strength. Below, I am going to present the leaders of the group first, followed by other firms setting up behind them.

See my notes on the charts.

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Despite some sloppy charts throughout the broad market with technical damage sustained after the selling in the first few days of last week, another V-shaped bounce to new highs is always on the table. If we see a squeeze this week, then I think the education stocks are poised to put the hurt on bears leaning heavily the wrong way. You are talking a much-maligned sector with its fair share of massive short percentage of floats. Indeed, a squeeze would be painful.

On strength, I like the charts of the following education stocks the best.

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With the bulk of earnings season in the books, the economic focus this week will shift decidedly from micro to macro, with the mid-term elections, FOMC meeting, and employment data undoubtedly occupying the top stories of both the general news and financial media. Whereas I am extremely cautious holding stocks through earnings reports which have distinct tangible affects on price action, the macroeconomic implications that are set to take the spotlight this week will consist largely of noise, at least from a swing trader’s perspective.

As difficult as it may seem, we cannot let noise distract us from the task at hand, which is to always respect the prevailing price action in the market. As I discussed in my Friday evening videos, the past two and a half weeks have allowed the S&P 500 to churn sideways. Much to the chagrin of top-callers, the broad market has strongly resisted a steep correction. Moreover, we continue to see impressive underlying strength in many individual names. While no trend lasts forever, I believe that the S&P could just as easily blow-off to 1200, or even 1220 (52 week highs at 1219), before seeing that 5% correction, as it could “sell the news” in the face of this upcoming week’s events.

Hence, I prefer to keep erring on the side of the prevailing trend until I am given more of a reason to turn bearish than a few weeks of sideways action.

Below, you will find my top setups for the upcoming week. Feel free to pick and choose whichever ones best fit your style. Please keep in mind that these are trading ideas only. I also urge you to use stop losses in order to mitigate your downside risk. In general, I prefer a trailing 7-8% stop loss, unless otherwise indicated on my annotated charts.

I hope you find these ideas helpful.

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