The market is under a lot of stress right now. And we can see it in the price action.
The last few weeks have been extremely volatile.
But my 4 stock watchlist cuts through the noise…
Investors can’t decide whether to push to new highs or slide into a massive pullback.
The market dipped hard in mid-June before the SpaceX IPO, then it rebounded. Now it’s dipping again on renewed tech fears and sticky inflation.
You can practically see the indecision in this price action…
To an inexperienced trader, this might seem like the worst time to build a position.
“The market doesn’t know what’s next, how can I possibly guess correctly?”
Nobody knows what the broader market will do. But when we focus on smaller/more specific assets, the setups are simpler.
And with so much volatility, these moves are bigger. Which means there’s more meat on the bone.
I’m watching 4 stocks to take advantage of this momentum…
My Favorite Angle To Trade
I don’t chase strength, and I don’t run from weakness.
I hunt at the extremes, when a chart stretches so far in one direction that it has nowhere left to go but back the way it came.
I’m watching four names sitting at those extremes…
- One used to be a market darling, it’s been beaten for four days straight.
- One just pulled off the largest IPO in history, ripped to the moon, then fell off a cliff.
- One got cut nearly in half and dropped a fresh bomb after the closing bell last night.
- And one is grinding into a round number that has stopped it cold before.
Here’s how I plan to play them…
How I Trade Reversals
Market price action acts like a rubber band.
Stretch it far enough in one direction, and it snaps back. Every time.
The stock runs out of buyers at the top and it runs out of sellers at the bottom, that’s when the move exhausts itself.
I buy calls into extreme drops and puts into soaring spikes.
The trick is patience. I wait for the price to stretch away from its moving averages, then stumble. That momentary stall is the tell. It means the crowd that drove the move is finally out of ammo.
Let me show you…
Watchlist Stock #1: Palantir Technologies (NASDAQ: PLTR)
PLTR is a fallen star.
The stock is down 31% on the year, after sliding four sessions in a row and dropping more than 6% in a single day.
This was the name everyone wanted six months ago. Now it can’t catch a bid.
Some of the recent selling traces back to the Iran peace deal. War names got bought during the conflict, and now traders are dumping them on the truce. The hot money is running for the exit.
Here’s what the crowd is missing: PLTR makes money with or without the war.
The defense headlines come and go, but the contracts and software revenue don’t disappear just because two governments shook hands.
PLTR recently fell below its YTD support, I’m watching for a pullback to those previous lows.
Watchlist Stock #2: Space Exploration Technologies Corp. (NASDAQ: SPCX)
SpaceX completed the largest IPO in history on June 12, pricing at $135 per share. Then the chart went vertical, tagging an all-time high of $225 on June 16.
Four days later, the air was sucked out and the stock cratered to an all-time low.
Now it’s consolidating near that support level.
There’s no chart history here. There aren’t months of support and resistance to lean on…
That makes it a perfect setup. We can trade the most recent support and resistance lines without having to worry about bag holders from 2025 screwing with the price action.
I’m looking for SPCX to fall hard through this support, that’s where I’ll be waiting with short-dated calls to play the rebound.
Watchlist Stock #3: Cerebras Systems Inc. (NASDAQ: CBRS)
CBRS is a slow grinder that just dipped below its all-time lows.
This AI chipmaker priced its IPO at $185 on May 14, then opened at $350 and touched $386 within a few hours. The move was caused by pure AI euphoria.
Six weeks later, it’s trading near $190. That’s nearly half of it’s value from the top. And the latest blow landed after the close on June 23…
Cerebras posted its first earnings as a public company. Revenue jumped 92% from a year ago to $193.4 million, which sounds like a win. But management guided gross margins lower, and the stock gapped down.
Now the chart is pinned almost exactly on its $185 IPO price.
I want to see a more dramatic selloff before I try and play it for a bounce. But this initial price action is already a step in the right direction…
Watchlist Stock #4: iShares Russell 2000 ETF (NYSE: IWM)
While blue-chip AI darlings get crushed in the larger market, small caps are partying at the highs.
The IWM is up more than 20% on the year and knocking on the $300 ceiling.
I love to trade the IWM. It’s cheaper than the SPY, and the small-cap names inside it are more volatile, which means we have bigger moves to trade.
The current $300 level is extremely important…
Round numbers like this draw buyers and sellers alike. Some see it as an opportunity to get in at the new floor. Others see it as an opportunity to get out before a potential rejection.
Here’s the divergence that has my attention: big AI names are falling apart while small caps sit at record highs. That split won’t last forever. Someone’s got to budge.
If the IWM shoots past $300 and stumbles, I’ll look for puts to ride a pullback. The higher it stretches past $300, the better my risk/reward on the way down.
Watch The Snap-Back
Reversals are where I make my living.
Crowds panic at the bottom and get greedy at the top. All the while, I’m on the other side of both moves, ready for the reversal.
Watch these four stocks into the back half of this week. Let the chart confirm an exhausted move before you commit.
The volatility is here.
Make sure you’re ready to ride it.
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
