Warrior Trading Blog

Small Wins Add Up! +$640! | Mike’s Trade Recap

Mike_5-22

Hey. What’s up, guys? It’s Wednesday. We’ve made it to the middle of the week, and we’re just barely hanging on there with a few green trades as we grind along on these low numbers until the momentum returns. It’s definitely been a little bit difficult of a market to navigate. The action’s been very choppy. The price action in the overall indexes is very lethargic. We’re not seeing much force in the moves, which is really tough to get any momentum. You got to be really conservative, play a lot of defense, and be patient.

I want to talk about today’s trade. We were able to lock in a decent win for just over 600, and talk a little bit about the price action on that, and review a few of the things of a technical importance that I want to talk about. Stick with me, and we’ll review this morning’s trade. …

All right, good afternoon, guys. Time for recap of this morning’s action. Again, we continued to kind of grind through these sideways choppy markets. What resolution there is, is very limited. It’s very short lived. We’re not seeing that continued momentum resolution that we would normally see in just a typical market. We’re in a period of consolidation right now. You definitely have to be a little bit more conservative, a little quicker on the exits, quicker to the profit, more or less.

Tried a trade today on JWN as we made a big rejection, which we’ll talk about here in just a minute. Was able to get a portion of the position off, lock up something for the day, at least make the day worthwhile. So up just over 600 bucks on that, and then I stopped the balance, break even. Let’s take a few minutes, break down what happened in this trade, and talk about why it was on the watch list.

So JWN this morning gapping down earnings. We had a pretty decent set-up on this with this major pivot in through 35. Okay, if you look at the daily chart, you’ll see that this pivot at 35 is very substantial. It’s just basically a pivot low in the market. You can see this pivot low. It’s over a long term. It’s just acted as a big support level through this bounce right here. It’s been holding since this point in time. It’s essentially just a pivot low in the market that when you have these big inflection points, you definitely want to pay attention to them, and just simply that we held the bottom there. That’s been the bottom for the last two years, or more than that. Wanted to pay attention to it.

Then below that, we had really nothing until down until another one of these pivot lows at 24 and 40s. All right, so a lot of room to move through here, and was looking really good. The chart was kind of weak. It hadn’t really been able to make a big push high. It’s been kind of channeling, and we broke down through the down side of the channel. So when I talk about channeling, basically what that means is you’re going somewhat sideways, right? Over a long period of time, basically have this sideways channel. Instead of resolving to the upside out of the channel on momentum, you’re resolving to the downside through the bottom of the channel with some volume. So volume coming in today on the sale, but again, the move is in the gap, right? That’s where the move is taking place. We’re not seeing the continuation.

Those are the levels we had. Basically, one big pocket here. That’s what I was looking to trade was if we were to stay below this 35 level, and start to take out the pre-market low here down through 33-50, had a really good potential for this thing to roll over; especially if the market continued lower on the gap that it had this morning once again.

All right, gap lower. Just in the event this market started to roll over here and continue down through the gap, then we would had some potential for that trade to really work. That’s why I kept this on watch. Obviously out of the open was out of play for a fade, but once it came up and hit this $35 pivot, made a big rejection, and started to basically reverse the entire move. We started to get below VWAP here. I started to get short around 34-20. All right, started punching the keys, 34-20. I got filled kind of all over the place since it was an SSR. I actually didn’t get that many shares at all because it was kind of tough to get filled on this. I got filled kind of all over the place, all the way down to 34, I believe.

We started to look like we were going to resolve here. We took out the low, or took out the initial low of the open market. We had the pre-market low come through next. I was watching this. I was in it. It looked good, started to take out the low, retest. The VWAP looked good. We started coming again, but then we held. We talked about this the other day, noticing when those subtle price action cues present themselves, and knowing how to read them.

Let’s dial into the faster time frame, and talk about that in a little bit more detail. If you look at the open here, you can see what happens. We get the big spike up, big rejection off that level, lower high, resolve lower through the VWAP. I waited until it pulled a little bit more from VWAP. I started to take the position as we started to break down through here. We had a little bit, retest the VWAP, which was okay, made a lower low. Right, that’s good. That’s what we want to see, it made a lower high. That’s what we want to see. It made a lower low, again, through here. Perfect. This is where I actually took a little bit of profit as we hit 33-80; took a little bit off.

I sat with it to see if we make a lower low, and then look what happened right here. We talked about this the other day where if you’re not continuing to make a short trade, and you’re not continuing to make lower lows and lower highs, you need to be on high alert that the trade may be over. Okay, because the momentum is most likely gone, if that’s the case. You can see here, we made a little bit of a lower low, and then we popped back up, pulled back, lower high. I stuck through this one right here because we were still making a lower high. This was a lower high from this, and this part right here is a lower high from this.

I was giving you the benefit of the doubt. I was still in the green, since I had taken some profit here. We started to roll over. We looked good again, but then we stopped. All right, but again, still lower high, lower high, but not a lower low. This did not come in to make a lower low. It got stopped there, basically put in a double bottom. All right, so you can see when that didn’t happen, then I put my stop back above the last … the most recent pivot, which was right here at 34. Could I have let it to go to VWAP? I sure could have, but why would I do that when we can confirm prior to that, that the move has … is concluded.

So we had a double bottom in through here. We weren’t really making lower lows. We weren’t continuing momentum. As we started to round back up off this level, and come through 34, I stopped out the balance. I think I got filled up near 34-05 and 10, as we kind of punched through 34. That was the trade for the day. It just, again, we didn’t see the continuation, but this is really important in that you recognize these subtle cues from price action. Which you can really only gain from the clarity that you get on these faster time frames. I’m using the 24 second. You can watch the one minute, but it is not going to give you the clarity of these very fast higher lows, lower highs, to give you kind of a real detailed insight as to what the price action is doing. You can really get ahead of the move, and keep everything really tight by using this. It takes a little bit of time to understand how to do it, but once you do it, it definitely will improve your trading quite a bit.

One other thing I want to touch on since we talked about it yesterday was volume profit. I stayed in this trade because of this volume. If you look at where we in the trade at right here. All right, so if you’re looking at this real time, look at the volume. See how the volume is sustained? The volume is sustaining. It’s actually increasing a little bit into the move. That’s what you want to see for momentum. This thing had all that we needed for our criteria to be met. It had a direct catalyst of earnings. It had room to move. You had the volume. You had the set-up, the pivot that we talked about, I showed you on the fast time frame. Everything was there to get this trade to continue, but again, the lack of action in the market is not allowing for that right now; but you can see that this volume profile is sustained and slightly increasing into the move. That’s really, really good.

As opposed to what we traded yesterday, where we had a big decrease in volume on KSS. Just to revert back to that for a second, you can see the difference here in that … See how the volume is greatly decreasing, right? It’s decreasing. So that tells me that well, there’s not as much sell pressure on this, so I might want to cut it out a little bit early. That’s what I decided to do as we made this higher low in through here. I cut it lose because we weren’t continuing on momentum to the downside, as opposed to JWN where we were actually increasing on volume into the move. That’s why I held onto it a little bit longer. Gave it the benefit of the doubt, but then I said, you know what? I just don’t see it. We’ve held. The market’s sitting kind of sideways, so slightly higher. Now the volume is actually decreasing quite a bit. We’re not getting that continuation. This is where I stopped out as we started to pop back up. You can see that once the sustained volume dropped off to now decreasing, and we weren’t making any more lows, tells me that selling is probably gone. I decided to stop out, and just lock up what I had for today.

That’s okay. We’ll keep grinding along on these low numbers until momentum is back. Once it is, we’ll be able to become aggressive again, and lock up some big winners to make up for these relatively slow times. That was the trade on JWN. Nice attempt, just lack of action in the market didn’t allow it to work. Now, the one that is probably the most frustrating here is this LOW. I actually, the broker I trade with, didn’t have any shares available to short. I talked about this in the morning watch list below the 200 day moving average. If you could … stay below that and continue down through pre-market lows, you had a really good potential for a nice continuation trade on this. Of course, the one I don’t have access to is the one that makes the cleanest move right to the 90 pivot that we had.

That happens. Part of trading, but nice to see that the set-up actually worked. I hope some of you out there were present during the watch list this morning, were able to capitalize on it and do well with that trade. In any event, guys, we’ll get back at it first thing tomorrow morning.

Hey everyone, thanks for watching the videos. I’ll continue to make sure that all of the watch list, as well as the recaps, are available to all of you. Make sure you subscribe to keep up to date on what’s hot and what’s not in the market.