Good morning, traders…

With last Monday being a holiday, we missed our usual Predictive Price Fusion live session.

But since these “compression trades” are working so well right now, I want to go over what we couldn’t cover on Monday. 

This strategy has a simple idea behind it: certain spots on a chart give you better odds.

These spots come from a combination of:

• Historical behavior – Patterns that tend to break big after consolidation.
  
• Options pricing – Low-cost contracts.
  
• Volume psychology – Price battling at key risk zones where a breakout leads to big moves.

This style doesn’t need a high win rate. In fact, it usually loses slightly more than it wins on a total win rate basis…

But when it does work, the wins are usually huge. When it doesn’t, the losses are tiny. And that balance gives this strategy a massive edge.

With that in mind, let’s take a look at two compression trades that could break out huge this week…

Setup #1: Lockheed Martin Corp. (NYSE: LMT)

This chart’s been tightening up for a while now, and it checks all the boxes. Volume, structure, history … it’s all there. 

If you look closely at this daily chart, you’ll see it’s been moving in a very tight range, coiling like a spring. 

And when the price finally breaks out after being this compressed, it’s usually not weak … but explosive. 

I call this pattern “The Nozzle.” 

It’s like pressure building within a firehose. When it finally releases, you don’t want to be standing in front of it … you want to be wielding the power behind it. 

The key level we’re watching is right around $480. If LMT clears that and holds, we could see it make a push toward $500 (and maybe even beyond). 

The daily chart already showed a breakout earlier in the year from $426 to $480. That’s a nearly identical setup to what we’re seeing now.

I’m looking at the June $500 calls. They’re a little pricier, but if this breaks, the momentum should be there. 

You can also look out further to July or even August if you want to give the trade more time to play out. 

Setup #2: Target Corp. (NYSE: TGT)

The risk-reward here is as clean as it gets. 

TGT dropped hard after earnings and some brand sentiment issues. But now, it’s sitting in a low-volume pocket, and we’re watching for a reclaim of $105, possibly $124 if it gets real legs.

Right now, it’s hovering around $94. So maybe $6 of downside risk if it breaks lower, but a whole lot more upside potential if it turns. 

That’s the kind of trade I like to scale into with time, the kind of setup that’s ideal for Predictive Price Fusion.

It’s not an overnight home run. It’s one of those you set, watch, and manage with intention. 

I’m watching the August $115 calls. They’re cheap (around 40 cents), giving us room for the move to build. 

We’re post-earnings, so you’re not fighting a news catalyst. It’s all technical. And if those technicals wake up, TGT could be a solid multi-day runner.

The Battle Zone: 4 More Honorable Mentions

Notice how both of those charts are compressing: the share prices are tightening into well-defined ranges…

• $426-$480 on LMT
• $88-$103 on TGT

But stocks don’t stay rangebound forever, making this sort of price action one of the most reliable ways to spot breakouts before they happen. 

That’s why we’re also looking at names showing early compression on our upcoming Battle Zone Scanner. 

That tool’s not quite ready yet, but we’re getting close (it should be live in about 30 days). 

This brand-new scanner will automatically flag the chart patterns we search for, making your prep time a whole lot easier.

Some early names the scanner has flagged:

• Take-Two Interactive Software Inc. (NASDAQ: TTWO)
  
• Walmart Inc. (NYSE: WMT)
  
• Novo Nordisk A/S (NYSE: NVO)
  
• American International Group Inc. (NYSE: AIG)

Stay tuned for more information on the upcoming scanner, watch TGT and LMT this week, and read my P.S. message for a very special tip.

Happy trading,

Ben Sturgill

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*Past performance does not indicate future results