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Warrior Trading Blog

+$1k A day Keeps The Job Away! | Mike’s Trade Recap

Mike_6.25

Hey, good afternoon, guys. One single trade today, and we’re closing up $1,000 on ABBV. Market continues to be quite slow and choppy. Very few opportunities on a day-to-day basis, but it’s important to sit tight, remain patient, and once those setups do present themselves, then we can become aggressive. Summertime is always a slower time of year when the volumes are less. That means you have to be a lot more risk averse and be very patient. Let’s take a few minutes and break down today’s trade in ABBV.

All right, good afternoon, guys. Time for a recap of this morning’s action. Appeared to be a little bit quiet this morning coming into the open. We really only had one stock we were closely watching, and that was this ABBV. Did okay on it. I didn’t trade the opening drive because of some significant support that was nearby. I was waiting for some initial consolidation to take place before I took a trade, so that’s what we did.

We got a little bit of a move out of it. We didn’t get the full continuation I was looking for, so I covered a portion of my position and I got stopped in the balance. I was able to lock up though just over $1,000, which is definitely good for a stop out. I’ll take that any day. Decent way to start the day here. Looks like I might be ending it that way too, which I’m okay with. Green, 1,000 on ABBV.

Let’s talk a little bit about the chart itself and what I saw on this that interests me. First thing on this stock is that it was the acquirer of AGN. AGN was the stock being bought, and that was… Those are the stocks we just don’t trade. Buyouts we don’t trade. However, the acquirer is always one to keep on watch because they often drift, because they’re spending a lot of money to buy another company. That typically weighs on them, at least in the short-term. As you can see here, was drifting in the pre-markets, and we got that hard sell at the open.

Same thing yesterday on Eldorado. If you guys remember CZR was bought by Eldorado yesterday, so CZR was a stock that was bought out. Just didn’t get much movement here, but that’s typical with the stocks being bought out. ERI, Eldorado, is the one yesterday that faded. Again, being the acquirer, this is the one that you definitely want to keep an eye on.

Today, that stock was ABBV. Being that that’s the news we had, we wanted to flip over to the daily chart and take a look at the levels. Now, a couple of trend lines that came into play on this that were really interesting to me, one of which was this [macro ascending 00:03:02] support, which obviously had broken down here, and then retest from the underside recently and has failed that. Then, we have some descending support that came into play, some shorter term descending support here. Then, little bit longer term descending support here, which is where you can see we’re getting stopped on here today.

In-between that, we really didn’t have much. We only had this 6930 pivot, and it was a decent spot. I mean it wasn’t anything too hugely significant, but it was something worth keeping on watch. It basically double bottomed there before really moving higher. You have to keep those levels on watch. It would be pretty bad if you just completely overlooked it, and then the stock obviously gets caught up there and it would affect the trade. Being aware of it is important. Those are the levels that we had, big breakdown here, nice looking chart. Decent news catalyst that we could watch.

With the market being relatively slow, this actually looked like it was going to provide a decent opportunity. What happened here out of the open is that we started to pull through this pocket, it got pretty close to the 6930 pivot. We were opening around 70. It only gave us about 60 or so cents from the opening to get down to this pivot. It’s just not something that I typically will do is go short and do a support level or go long into a resistance level. It’s not really the safest thing to do. It’s very risky, especially on a stock that has a lot of volume. These are situations where they can reverse fast, and you don’t want to be caught on the wrong side.

What I wanted to do is I wanted to see at least some sort of initial consolidation on the stock to take a position. If you look at the fast timeframe, which is what we watch out of the open, you could see there was… Looking back, there probably was a point or two that you could have gotten this thing and taken a position. I just was giving a little bit more time, because the markets have been slow. They’ve been choppy. I didn’t want to get caught in any sort of whipsaw, reversal move. I decided to sit tight and wait for a little bit longer term consolidation.

You can see, here’s the breakdown out of the open. You’ve got a minor retest and fail. It started to pull, could have taken this trade right here around 69. You would have done obviously pretty well, but I decided to wait. I wanted to see a little bit more consolidation than that, especially because of the type of selling we were getting. A little bit of a relief move is always good to see. Instead, what I did is I waited for this to play out, we didn’t really put in any sort of relief move on a five minute. I just wanted to wait a little bit longer.

Then, what happened here is we came and tested our trend line. You can see, this is a descending support trend line which we tested. We started to trend back off of that. Then, what I liked is if you look back at the five minute here, we had this reversal move. Then, what took place is that we had a bunch of inside bars. Inside bars mean stock’s in equilibrium and you don’t really want to get involved in that point in time. Being that this was the control bar, this was the bar that we popped up off the bottom, all these bars inside of this were, to me, they’re considered inside action.

I don’t want to be really involved in inside action. What I was waiting for is a break of this control bar, which was 6680 basically. Low was 6678. What happened is as we started to get back over here around 1015, we started to come into that level. We looked pretty good. I started taking the short when I saw it rejecting 67 and pushing through 6690. Around 1015, if you look at the price action at that point, you’ll see that’s when we started to come back down through the 67 level. Let’s see here, 1015, right here.

As we started to make these lower highs, we kept trying to retest 67. We couldn’t do it. Then, we started to break down here and I said, “All right. We’re now breaking back down below 67. We’re starting to take out that 6680 mark, let’s take a position on this.” Then, if we were to break lows, I would add to the position to see if we could continue lower. I took a position here, 6690, 6680s, and was a little bit difficult to get filled there. I didn’t get filled as much as I wanted to.

Then, I decided that, okay, well if we break the low, I’m going to take a little bit more and see if we can take out that trend line to really start fading. What happened was is I took a short here. We broke the low right here, was right around the low. You could see this nice little consolidation that we get, started to break down again. I covered into this flush right down to the trend line at 6615, I covered a third. Ever since we touched that, we popped back up and I actually stopped once we got back above… You can see there’s a pretty decent pivot put in through the 6680 level.

Once we got above this and started to push, I just stopped out, 6690, and I said, “You know what? It’s not continuing. That trend line has stopped it dead in its tracks. Should have broken that, because it broke lower day. There was volume coming in on the cell, and it didn’t actually push through.” I decided to stop out and lock up that $1,000 win. You can see, just been respecting that line here into the early afternoon. Starting to get a slight fade on this, and it’s still holding above the trend line. I don’t see any sort of hard move coming.

That was a trade we took. Could I have gotten it earlier in the day? I sure could have, but that’s not the type of trading I’m doing. I want to wait for the biggest potential moves. This one blew right through that support, some stocks are going to do that. It’s not every single time that a stock is going to respect a level. You can see, this is a good example of why not to do it. Let’s say this morning that we had a support level up there that it did respect. This was a situation where I shorted right into this, and then it turns around and blows you out. This is what typically does happen, and this is why I don’t do that.

It’s really important to understand that I didn’t take that position for a very specific reason, and this is why. I don’t want to get blown out of a trade by making a improper decision of shorting into a significant support level. We just don’t do that. We wait for the level to be broken. We wait for price to break, and then we wait for a retest to occur and a fail. Once that happens, then we’re good to go. I’m not going to anticipate it because this is the type of action that could happen. That’s what I refer to as an easily avoidable, what would be, a loss. Important to just wait for those levels to break.

While this one did break this morning, could I have tried a small opposition? Sure, I could have. Again, market conditions are slow. Things have been choppy. We haven’t seen resolution. I just didn’t want to get caught in a situation where I took a trade and just trying to force something just to get something to work and it didn’t. All in all, it was a good day. Plus $1,000, one single trade, so we’ll take that. We’ll get back here first thing tomorrow morning and look for something else. Everyone, have a great evening and I will see everyone tomorrow.

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.