The Small Cap Swing Trader Alert Archive
Below you'll find The Small Cap Swing Trader setups stacked up and ordered chronologically.Weak U.S. Job Market Flashes in ADP Data
Weak U.S. Job Market Flashes in ADP Data: What Traders Need to Know
The weak U.S. job market was evident again in the ADP data, which showed a loss of 32,000 private-sector jobs in September, contrary to forecasts for a gain of 45,000.
With the BLS jobs report delayed by a government shutdown, traders are leaning on ADP as the early signal — and markets are recalibrating expectations for the Fed.
Key takeaways from ADP
- Jobs lost: 32,000 vs. -3,000 in August and expectations for +45,000.
- Sector breakdown: Leisure & hospitality shed 19,000; education & health gained 33,000.
- Small biz pain: Firms with <50 employees cut 40,000 jobs; firms with 500+ employees added 33,000.
- Fed impact: Confirms dovish tilt. Weak hiring underpinned September’s rate cut and more cuts are expected.
Market implications
ADP’s weakness adds to the narrative of a slowing economy — and increases pressure on the Fed.
Bonds are likely to rally (yields fall), while cyclical equities could underperform.
Defensive sectors — healthcare, utilities, staples — may see rotation inflows if payroll weakness proves persistent.
Traders also note that ADP has flagged labor market softness ahead of BLS revisions in recent months.
If this pattern repeats, official data could catch down to ADP’s weak signal.
Trading setups
| Asset / Sector | Bias | Setup |
|---|---|---|
| 2-Year Treasury Yield | Bearish (yields) | Short bias below 4.10%. Weak jobs = more cuts = yields lower. |
| S&P 500 (SPX) | Neutral / Defensive Rotation | Choppy intraday. Long XLU/XLP vs. short XLY to hedge. |
| Small Caps (IWM) | Bearish | Small biz job losses = relative weakness. Short rallies. |
| Healthcare (XLV) | Bullish | Sector added jobs. Long on dips toward support. |
Intraday playbook
- Equities: Fade strength in cyclicals if SPX fails to hold above 4650.
- Bonds: Look for TLT long entries on dips — payroll weakness = bid for Treasuries.
- DXY: A softer jobs market could weaken USD if Fed cuts become more aggressive.
Bottom line
The weak U.S. job market just tightened the Fed’s dovish bias.
Expect increased volatility in bond and defensive equity sectors.
Day traders should watch for weakness in small-cap stocks, while swing traders can position for a rate-cut-driven rally in Treasuries.
Caterpillar Stock Outlook
Caterpillar Stock Outlook: Rate Cuts, AI Power, and a Technical Setup
After lagging earlier in the year, Caterpillar’s stock outlook has turned sharply higher.
Shares are up 22% in the past three months as Fed rate cuts, AI data center demand, and construction recovery create a potent mix of catalysts.
Why Caterpillar is rallying
- Rate cuts: The Fed resumed easing in September after staying sidelined most of 2025, a tailwind for cyclicals.
- Tariff fears fade: Trump’s steep tariffs raised costs but didn’t derail demand.
- Valuation expansion: The forward P/E ratio has stretched to 23 times, up from 17 times a year ago, as investors price in a recovery.
- AI kicker: Data centers need backup power. Caterpillar is positioned as a supplier to the AI boom.
Wall Street view
Baird’s Mig Dobre called CAT a “Bullish Fresh Pick,” citing catalysts from construction, mining, and lower inventories.
BofA’s Michael Feniger has a Buy with a $517 price target. Dobre sees $540, implying 16% upside.
Street sentiment is improving: 50% of analysts now rate CAT a Buy (up from 33% a year ago). The average price target of $460 lags behind current prices, but revisions are moving higher.
Technical setup
Caterpillar trades 4% below its 52-week high after a modest reversal from intraweek peaks.
Key support sits at $441.25, the prior breakout level cleared September 17.
A pullback to that zone would be a compelling entry point ahead of a potential year-end rally.
Longer term, a test of the $500 round number looks likely into early 2026.
Trading levels to watch
| Ticker | Support | Resistance | Target |
|---|---|---|---|
| CAT | $441.25 | $480.00 | $500.00+ |
Trading setups
- Day trading: Fade intraday strength if CAT pushes +2% above resistance with low volume. Buy dips at $445–450 for scalp entries.
- Swing trading: Hold long above $441 support. Initial target $480; breakout retest could drive $500+ by early 2026.
- Relative trade: Long CAT vs. short DE (John Deere) to capture CAT’s stronger relative strength trend.
Bottom line
The Caterpillar stock outlook has flipped bullish. Rate cuts, AI power demand, and cyclical tailwinds all support higher prices.
Traders should watch $441 as the key threshold and $500 as the longer-term target.
With improving sentiment and catalysts aligning, CAT looks ready to keep climbing.
Scaling Into Trades
Smarter Lot Sizing: How Scaling Into Trades Improves Consistency
One of the most overlooked skills in trading is scaling into trades. Many traders either go all-in at their first entry point or wait too long, missing the best opportunities. But by learning how to adjust lot sizing based on confidence levels, you can dramatically improve your results.
Why Scaling Matters
When you’re scaling into trades, the first position is smaller because your confidence is lower at that early stage. You’re not trying to pick tops and bottoms—you’re simply giving yourself a chance to participate without overexposing your account.
As the trade develops, your confidence grows. This is where you add more size—at the technical levels that have a higher probability of holding, such as pivot lines or strong support/resistance zones.
Today’s Example: NVIDIA (NVDA)
This morning’s setup in NVIDIA was a perfect case study in scaling into trades:
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First entry: a small position at $186.38, where probabilities were moderate.
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Second entry: a larger position at $185.73, where the pivot line gave us stronger conviction.
By weighting the second entry more heavily, the average price dropped closer to $185.73, making the trade much more favorable.
Stop Placement and Targets
A common mistake is placing stops too close to the first entry. Instead, manage risk with a tight stop below the pivot. This way, you’re not stopped out prematurely, only to chase the trade again. Even modest moves—just 20–30 cents—can deliver consistent profits when you’re positioned properly.
Why It Works
The beauty of scaling into trades is that it creates balance:
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Smaller risk on uncertain entries.
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Larger size where probabilities are stronger.
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Consistent profit-taking instead of swinging for home runs.
Even if each trade nets only $200–$300, repeating that process throughout the day produces meaningful results.
Takeaway
If you’re serious about improving your trading consistency, start focusing on scaling into trades with purpose. It’s not about making the biggest score—it’s about stacking steady, repeatable profits by letting probabilities guide your lot sizing.
👉 Want to see how this played out live? Watch the full video here: Click Here
Trading Psychology and Premature Entries
The Psychology of Jumping the Gun in Trading
A friend and fellow trader called me on Monday and asked me to look at the chart of Robin Hood (HOOD) and “explain why the short was losing money.” I responded as I have many times in the past: if it were me, I would be waiting for a pullback to support and resistance at the Fibonacci confluence. Then, I’d take a long position in the direction of the trend.
A strong trend can make traders feel that a reversal is inevitable, but the “trend is your friend”
He didn’t wait for the pullback. Instead, he entered long at the swing high and stopped out on the way down to the exact confluence of indicators that would have triggered a long entry by my rules. To make matters worse, he convinced himself that the drop proved he was “right all along” about the short—just before the stock reversed, ripped higher, and hit the logical profit objective.
Waiting for price to “come in” and reach the opportunity of confluence increases the odds of success dramatically.
Sound familiar? If so, you’re not alone. I’ve made the same mistake myself. Sometimes the urge to outsmart the market during an extreme move is irresistible. Unfortunately, markets can remain overbought or oversold far longer than we expect. Tops and bottoms often call to traders like sirens from the cliffs, and no number of wrecked accounts seems to silence the song. This is where trading psychology and premature entries collide.
Why We Do It
At the root of this behavior is a cocktail of fear of missing out (FOMO) and the illusion of control. When price makes a sharp move, our brains start running “what if” scenarios at lightning speed:
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“If I don’t get in now, I’ll miss it.”
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“It’s moved too far, so it must turn around.”
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“I see something others don’t.”
Each of these thoughts feels logical in the moment but is fueled by emotion, not analysis. Worse, when we’re occasionally correct—catching the top or bottom once in a while—it reinforces the behavior. The brain remembers the win more vividly than the string of losses that came before and after. That’s why trading psychology and premature entries often go hand in hand.
The Hidden Risk of Being Right Sometimes
The most dangerous outcome isn’t losing a trade. It’s winning the wrong way. Being “right” on a reckless entry wires the brain to crave that high again, pushing traders to repeat the mistake with bigger size or less discipline. Over time, this creates a destructive cycle: chasing the rush instead of following the plan. Understanding trading psychology and premature entries is the first step toward breaking this cycle.
Breaking the Cycle
So how do you stop yourself from getting lured into the rocks?
✅ Anchor to process, not price.
Your edge lives in repeating setups with statistical validity. Write down your entry criteria and do not deviate.
✅ Use waiting as a tactic.
Tell yourself: “If it’s a true opportunity, it will come back to my level.” Patience is an action.
✅ Practice mental rehearsal.
Visualize watching a move run without you and feeling calm. Rehearsal reduces FOMO in live fire.
✅ Track your “impatience trades.”
Journal every time you enter too soon. The pattern—often embarrassing—creates the pressure you need to change.
Disciplined routines directly counteract the pull of trading psychology and premature entries that lead so many traders astray.
Final Thoughts
The HOOD chart was a perfect example: the market offered a clear, logical profit objective, but only to those who had the discipline to wait. Trading is rarely about outsmarting others. More often, it’s about outsmarting yourself. The sirens will always sing, but with the right preparation and mindset, you can steer safely past them—while others shipwreck on the rocks. The choice is yours: fall prey to trading psychology and premature entries, or master the discipline that keeps you in control.
US Pharma Tariff Cap
US Pharma Tariff Cap: Relief for Drugmakers Amid Trump’s Trade Moves
The Trump administration will honour a US pharma tariff cap of 15% on imports from the EU and Japan — far below the 100% levy initially threatened.
For drugmakers such as AstraZeneca, Eli Lilly, Novo Nordisk, and Merck, this means less disruption and more breathing room for ongoing U.S. investments.
What’s changing?
On Thursday night, President Trump announced 100% tariffs on imports of patented or branded drugs, effective October 1.
However, by Friday, clarification arrived: the cap will remain at 15% for EU and Japanese pharmaceutical companies, in line with existing trade agreements.
Generic drugs — the bulk of US imports — are exempt.
The administration also hinted at exemptions for companies “building” or “under construction” on US manufacturing facilities.
With multiple firms already racing to break ground, the sector is positioned to weather the tariff storm.
Industry response
- AstraZeneca, GSK, Novartis, and Roche have all announced new US manufacturing projects in recent months.
- Eli Lilly, Novo Nordisk: Already expanding domestic production of blockbuster weight-loss drugs.
- Merck: Shares moved in line with the market Friday, reflecting muted impact from the tariff clarification.
Morningstar analysts note that the tariff cap should have “minimal impact” on Big Pharma revenue and profits.
Instead, the sector’s bigger overhang remains pricing policy.
Market implications
Relief over the US pharma tariff cap removes a significant uncertainty that could have further pressured valuations.
Pharma stocks already trade at a steep discount to the S&P 500, around 13–14× forward earnings vs. 23× for the market.
The cap also rewards firms that expand US operations, reinforcing domestic manufacturing as a hedge against trade risk.
Day trading & swing ideas
- Gap setups: Watch AZN, LLY, and NVO for continuation moves if positive tariff headlines drive sector sympathy.
- Intraday volatility: Expect headline-driven spikes around Sept. 29 (Trump’s price-cut deadline).
Tight ranges could break on tariff + pricing news crossing wires. - Swing bias: With tariffs capped, pharma may attract bargain hunters.
Look for swing entries on pullbacks in AZN ($68–70 zone) and LLY ($565–570 support). - Relative strength play: Novo Nordisk (NVO) has outperformed peers; continuation toward $145–150 possible if tariff relief sticks.
Stocks to watch
| Ticker |
|---|
| AZN |
| LLY |
| NVO |
Watch for breakouts above resistance with volume for long swings.
Failed moves back under support can trigger short setups, especially if tariff exemptions remain unclear.
Bottom line
The US pharma tariff cap gives drugmakers near-term relief.
For day traders, it sets up headline volatility and sympathy plays.
For swing traders, it provides a backdrop for long setups in AZN, LLY, and NVO as the sector’s valuation gap could finally start to close.