"The Only Election Week Trading Plan You Need" Nate Bear, Lead Technical Tactician, Monument Traders Alliance Editor's Note: One of the best parts about being inside the War Room is locking in monster winners on both sides of the tape. This unique ability was on full display this morning when we captured profits of 153% from a massive plunge in Archer Daniels Midland (ADM) and 105% from a melt-up in Palantir Technologies (PLTR). THIS is what separates amateur traders from the pros. And THIS is exactly what you get with us inside the War Room. I expect things will only get juicer from here with election day underway and a Fed announcement tomorrow, Join us now for the rest of the election week. Click here to secure your spot in The War Room. See you inside, – Ryan Fitzwater, Publisher
Hey Gang, This is the American Ninja Warrior of trading weeks. Election Day is finally here. Tomorrow comes the all-important Fed announcement. And don't forget about the earnings bonanza going on. We've already seen Palantir (PLTR) smash expectations, with volatile stocks like ARM Holdings (ARM) yet to report, giving us plenty of potential setups later this week. As a day trader who's made millions in the market and is always hungry for more, I know it's easy to get excited with all this action. Trust me when I say EVERYONE needs a plan. Otherwise, just one bad trade can create a cascade of problems. Don't worry baby birds. I'll feed you. I'm going to take you through my plan for this week before we dive into on particular stock that's caught my eye. Market Outlook I mentioned this last week, but it bears repeating. The S&P 500 closes higher than it opens in November about ¾ of the time. During the last three election cycles, stocks ran higher after Election Day to close out the year. These stats are a bit lower for the Nasdaq 100, but still point to a bullish month. So, if you're looking for a simple trade idea to work with, there's your answer. Now, the VIX is still high, indicating traders own a lot of options on the S&P 500. Normally, that indicates traders are buying puts on the S&P 500 to hedge their portfolios. But I found something that says otherwise. Take a look at the option chain for the SPY ETF below: I called out the at-the-money $574 strike. Right now, the calls are trading for more than the puts, which is the opposite of how things usually work. That means demand for call options is higher than the puts, or at least the implied volatility is higher. Yet, the put/call ratio for the same expiration is 2.17 based on open interest and 3.21 based on volume. So, how do we reconcile these competing ideas? The way I read this way: - Like the election, people don't know what to expect. They are uncertain about the future.
- Traders are hedging against a possible squeeze higher than average.
- They are still aggressive in buying downside protection, but just as many people are willing to sell them puts.
In other words, people are betting that the market will move higher. This makes a lot of sense, given the seasonality. Knowing all this, I want to do three things: - Stay small before the election and fed rate decision come down the pipe
- Buy multiple contracts where possible to give me the flexibility to take profits on some while letting the rest ride higher.
- Focus on short-dated options in the near term and longer-dated options later in the week.
Now that we have the plan for the week, let's dig into a stock I've had my eye on ever since my S.A.M. AI picked up on it - Fastenal (FAST). The Fastenal (FAST) and the Furious Fastenal is one of those high-momentum tech stocks that falls in and out of favor. Earlier this year, it made a high just shy of $80 before dropping down near $60. Back in early October, the company reported solid earnings that led to a 10% jump in the stock. Since then, shares have held the gains trading between $75 and $79, testing those all-time highs. The latest consolidation pattern has created a TPS setup that could get a HUGE push higher. Here's why… The all-time high is $79.04. If you were a short seller, where would you put your stops? $79.04 seems like a pretty sensible spot to me. It doesn't matter that the short float percentage isn't high for Fastenal. With enough traders using that as their stop, we can still get a nice short squeeze if the stock breaks through. I find TPS works well for this situation because it traps short sellers in their positions. As a reminder, the TPS setup has three components: - Trend: A clear trend, in this case bullish, that is easy to spot. The earnings release extended the momentum that had already started weeks ago.
- Pattern: Price consolidates into a range that gets narrower. When you connect the highs and the lows, the trendlines should generally converge on one another.
- Squeeze: The dots at the bottom turn red when the Bollinger Bands move inside the Keltner Channel. This timing mechanism tells me when the price is getting ready to expand.
In the 78-minute chart above, we have all these elements coming together right near the all-time high. And with bullish seasonality in my favor, this is a stock that I believe could really take off when it breaks through those highs. Remember, I'm keeping position sizes small until we get through the election and Fed announcement. | 
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