Warrior Trading Blog

Case of the Monday’s -$1250 | Mike’s Trade Recap

mike_5-20

Hey, what’s up guys? Unfortunately starting off the week a bit in the red here after what’s been a kind of a tough morning trading Apple. We had a couple things lined up on a stock for us that looked really good initially but didn’t end up working out. Price action was kinda sub par and just had to cut it loose and take the loss. So let’s take a few minutes here and break down today’s Apple tree.

All right, good afternoon guys. I’m gonna do a quick recap of the trade here this morning. Unfortunately started in the week in the red a little bit here on Apple. Took a loss for just over 1200 bucks. I got kind of whipsawed out of this trade virtually instantly. Tried to manage it a bit, see if it would come back in for us, but just didn’t look like it wanted to end up working. So I decided to cut it loose and take the loss for the day and move on. But let’s take a few minutes here and break this down. Tell you what I saw and you know what happened during the trade and why typically, I tend to stay away from these, I refer to them as cult names: Apple, Facebook, Twitter, Netflix. All those ones just because they do have this whipsaw action that is consistent really always. And if you try to trade a sizable position, you can’t have whipsaw you need directional momentum.

So got kind of whipsawed today on Apple, but that’s okay. I wanted to try it because we were up against a pretty major pivot point. This 183.50, 183.60 level on the stock was big. I’ve been watching this for several days and there was a pattern being put in here that I liked and that was simply, we broke the 200 day first and then we had come back to retest it. You can see we caught support at this level here around 183.60, 183.50. In that zone there was a big support point and this is a macro technical level as you can see. There’s been many instances where we actually had tested this thing it held from both sides. So the fact that we were coming into there and then just the other day we tested it again and bounced further validated the level.

So I had been watching this for a break down below that level to see if we can get into this pocket here and potentially break down to the hundred day moving average and then all the way down to the 175 pivot, which has been big as well recently. So this morning with the market gap … and that’s a whole nother conversation with all these market gaps that we’re getting. We had the market gapping down and all this news with the tariffs and the chip makers being affected, it also is going to weigh on the tech. Apple obviously being part of that, you can see we were gapping down right to the pivot, right? We were holding it all morning and into the pre market and then once the market opened it did really exactly what we wanted it to do, is break down into this pocket on really good volume.

However, the issue is that … or the issue was that the spy, like we said, it was gapping lower and we can’t chase the gap because a lot of the times or the majority of the time these gaps are filled. Gap downs are back filled back up and gap ups are typically filled back to the downside before you see any sort of continuation and it’s really kind of playing out again today. You can see that the gap down has been bought until we essentially hit the gap fill, which was right in through this 285.50 level and then we’re just kind of chopping out sideways. So never want to chase the gap, that’s number one. That’s why I sat tight this morning and didn’t jump into Apple right away. I want to see some sort of retest. But unfortunately we haven’t really got that until around this 10:00, 9:50 level where we came back up to retest the pivot and it had appeared like we were looking like we’re gonna break down on this candle right here.

So if you’re looking at this in real time, this is what I was watching. Came back up, nice rejection here, and then we started to roll back over. And if you look at what the spy was doing at that same time, that is what got me into the trade here. And you’ll see right around 10:00, you’ll see we get this kind of big push higher and then we reject that. In this next candle we started to roll over. So if you look at this in real time and you see a big red bar coming back down here, this looks like you’re essentially retesting and failing because you now have this big upthrust candle that’s failed and you now have your next bar that started to roll over, back down through VWAP.

So as soon as that started happening, I said to myself, “Okay, well we have the market in alignment. The retest to the big pivot on Apple has failed and this is a good opportunity to see if we can get this fade while we’re below this big pivot point.” So what happened was … Let’s dial into a fast timeframe and we can see a little bit closer of what I saw here. So we’ll go back to around 10:00 and we had … This is the retest against the level, right? Failed retest, We started to pull. Now as we started to break this pivot right here, right? See this pullback, hold, push higher, failed retest. Now I won’t short the consolidation, which this essentially is right here cause you pulled back and put in a higher low. But once you’ve failed the major resistance point, once you clear that pivot, then the uptrend is now broken, right?

You can look at it from this sense too. You can look at it from that. So once that pivot low has been broken, the speed line has been broken, that’s where I got short. Okay? Again, we put in a lower high and we rejected the major resistance point and the spy was turning over as well. So once we broke that, I anticipated that, “You know what? This looks like we’re going to break down market looks. It appears to be relatively weak. Let’s see if we can get the continuation to happen.” And I got short at 182.60 as we broke through this pivot. Now, it started to look really good, right? We got back below the pivot, came into VWAP, and we actually broke down through 182 and I added right here because I thought that we would actually see a nice roll over on this because of this failed attempt to move back higher here.

So I took a thousand right around 182.60, I took another thousand as we are breaking 182, had a decent position built up, had a decent average. And then all of a sudden you got this huge whipsaw backup to 182.70. It’s almost a point from where it tested 182, or just below 182. Pulled back and I thought, “Okay, well this is okay. We’re just making a lower high here and we’ll get back a little VWAP and see if we can take it out.” Basically just a retest in trend that’s happening. So I held through this, we pulled back, started to look okay. Then we held VWAP again and then all of a sudden we popped back up, broke that pivot high, and then as we started to push right here, 182.90 this is where I stopped out.

Reason? Well because we didn’t confirm and start pulling away from VWAP to the downside. The spy also held, and I’ll show you that candle in a moment, but the spy also held and we started around back up on that. And I just didn’t want to be caught on the wrong side of this with a big position if the market decided to surge back higher. But what happened was, obviously you can see it, just kind of chopped around, really no direction. If you look at it from this sense, right, it’s just kind of a net neutral move. There’s not much happening, it’s range bound trading. And again, this is the reason I tend to stay away from these names because it’s very difficult to get a hard trending move on this for a long period of time. Now out of the open, you got it. You gotta be quick, but I don’t chase the days with the gaps.

This didn’t really have a direct catalyst, which is another concern of mine. However, we were breaking a big technical level and the market was week. So we had those two things going for us and maybe the right trade was to take it out of the open. But that’s typically not how I trade. I want to see a little bit of confirmation and I didn’t really get it there out of the open and don’t want to chase the gap. So as you can see, a just got kind of whipsawed around and decided to call it a day. I didn’t really want to trade anymore after that and took that $1,200 loss. But that’s okay. Again, the trade I would have executed again, any other day. It was right in trend with what we look for. A lower high, failed retest, market in our favor, confirmed weakness, room to move. It had all the factors to make a nice move. It just didn’t continue.

All right, so that was Apple. Obviously a nice move out of the open there. Again, just not one that I typically trade right out of the open because you see a lot of whipsaw action early, and that’s one of the things that is another reason I stay away from this. I know I mentioned it earlier, but when trading these types of stocks that don’t have a direct catalyst, especially these cult names, you see a lot of whipsaw action. And when you’re trying to trade a sizeable position, you can’t have whipsaw action, and these stocks have them consistently. So I will trade them very rarely. If we’re around and major technical point, then I will be interested in trading, like today, or if it’s got earnings. Those are the only two times I’ll really attempt it.

Apple’s giving me a little bit of a tough time the last two or three times I’ve traded it. So I’ll probably kind of put that one to the back burner unless we have some sort of major news on it, whether it’s earnings or there’s some sort of development or announcement from the company. I just typically stay away from it and days like this are exactly why. Because of the whipsaw action, you can’t manage a big position. But that’s okay. I realize that and I’m going into it and it’s just part of trading. But that was Apple.

I want to talk about that spy kind of fake out real quick. That got us into Apple. So if you look at the fast timeframe here, what we had was basically, we had that spy move down quick, kind of back up, and then we failed and got the below VWAP. So once I saw this get below VWAP right here, we failed the push, I thought to myself, “Okay, we’re looking good. We’re going to try to break down and continue through this. continue through the lows here and continue to sell.” But again, you kinda got faked and it was a higher low and then it pushed the highs again, and that’s what this candle on the five minute turned out to be, right? This one right here, this kind of dip and then like it was re bought.

So again guys, it was just choppy day and if you got in the trade as well and you took a loss, don’t be too upset about it. This is one that just kind of whipsawed around on us. The market’s been really tough, kind of whipping all over the place. You’ve definitely gotta be quick on your feet to extract any sort of profit. So that’s that’s the recap for today guys, and we’ll be back at it first thing tomorrow morning.

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