Warrior Trading Blog

+$2,800 for Tuesday! | Mike’s Trade Recap

Tuesday

Hey, what’s up, guys? Well, a really great way to end a Tuesday afternoon up 2,800 bucks. Really trying hard to close out the month of October strong. We got one more day to add to that bottom line and we’re going to try our best to really put in a good trade.

 

But today, up another 2,800 bucks on a two trades off GE. First trade, I got stopped for about a $1,500 loss and that was this morning. I walked away for a little bit. Came back this afternoon and noticed it had put in a really nice technical setup here and we decided to take another attempt at it and it actually played out very nicely. Put us back in the green by just over 2,800 bucks and I’ll take it to end the Tuesday. So let’s take a few minutes, break down the trade and the market in today’s recap.

All right, good afternoon, guys. Wanted to do a recap today of our trades here on GE, doing a little bit later in the day simply for the reason that our first trade, we were stopped on as it surged back up off of the first trigger point that we had at 10.50 and I tried to get short in through this level here, right against 11 because that was where we had a big point of resistance or former support. So I try to get short as we came into this at 10.90, 11 level. I had a little bit up here against 11.10 and it started to look it was going to roll but it resolved higher and I stopped out for about an average of about a 20 cent loss on this. So not too bad. I was in the hole about 1500 bucks or so.

But I wanted to keep it on watch because this was a very significant level here around 11 and we had another really nice level here at 10.50. So I said that I would keep it on watch. I would become interested again if it did get back below 11 first and I would consider taking it. Now, let’s take a look at the daily on this so we can get a little bit better context as to what we were looking at. Really weird chart, GE has just been breaking down for several months now and we had this shorter term, relatively shorter term, descending resistance that was well respected and it turned into a complex trendline. Complex trendlines, for those of you who are not familiar are trend lines where you have action on both sides where the line is still being respected.

So it starts off as a normal trendline. So this starts off as a normal descending resistance trendline, right? What happens is as it tests, tests, tests, it breaks right here, it gets back above it, retest, tries to run again, breaks back through, gets back up, test it to the penny, tries to run, fails, and now it’s breaking today, which is another sign that we could see continued weakness here. Now, in addition to the break, we also had the most recent low, which was yesterday at 10.93. Now, the fact that we have that recent low in conjunction with this trendline, it becomes a point of confluence where we have more than one point of support resistance that align at the same spot and that will definitely provide a level where you definitely want to watch where the trading becomes much more predictable, right?

It’s where imbalances happen and if there’s an imbalance, we want to be present because that’s where the most predictable trades originate. So being that we had that level there, I really liked it. Really weak stock, they slashed the dividend, just not good news for the company. It’s just a weak stock and the market looked a little bit weak after yesterday especially so. I was trying to see if we get this to fail. Initially, what happened was if you look on the five minute chart here, this is the move that I was waiting to happen at the open, but you can see it kind of was at this level in the pre-market. We made our pre-market watch list. We saw those levels align. We see how it respected that trendline yesterday and it broke.

Typically when these setups break in the pre-market, they tend to be very difficult to get to resolve in the same manner once the market opens. As you can see, it’s just another testament to that fact today. It didn’t want to resolve further. It caught support here at the next trigger level and then surged higher. But since we had such a major former support level, now resistance level at this point, I wanted to see if I could try it against 11 to see if it would reject and roll back over and this is the first trade that I took and I got stopped. So I took my first trade around 10.93, I believe I got filled and then I added more as we were rejecting 11.10.

So my average is right around 11 bucks and when we popped up over this level, I stopped out at around 11.20 and I said, “You know what, it’s a really tight stop for the type of trade that I normally would take.” But this is the stock we can’t expect to make a huge move. So twenty cents is definitely far enough. So I decided to stop out and that was my only trade for this morning. I didn’t really see anything else that I was that interested in. So I wanted to keep this stock on watch because of these significant levels. I really knew this thing had potential if the trigger level fired and it held below. The other level here at 10.50 that I’m talking about is another big level if we look back here. Just a big pivot here, a big move off the bottom, the first pull back, where it holds and then it runs again, so that’s a significant pivot point and then the next support is going to fall down here at 9, around 9.40.

That’s actually a big trigger level in itself. So let’s change that for the next time we trade it to a yellow line to signify a trigger. If that trigger breaks, it’s back towards the $6 level. So a lot of triggers on this stock here coming up, which is definitely something we want to watch for because this can definitely make a good move and with a lot of size, it makes it worthwhile. So again, after I got stopped out here, I sat tight. It did actually fade nicely off these pre-market levels as you can see, really right to the penny in the hard fade. No, I didn’t short that just because the market was trying to grind back higher and I wasn’t really interested in taking GE against the market.

So I sat tight. I waited until it got back to the pivot now. I stepped away at this point here for a few minutes and I didn’t take this move, but once we broke the low, right, this big trigger at 10.50, I wanted to see what was going to happen here if we were going to come back higher, retest and fail or consolidate for a little bit like we did and then break out of that wedge. So what happened is as I was sitting here just looking to the market, I noticed that it was just kind of consolidating sideways. We’re obviously holding lower levels. The spy was looking weak, like we could get an afternoon rollover. So, that’s definitely something that you want to try to be in alignment with is the market, especially on large cap stocks and GE is definitely one of those.

So as I saw this consolidation happen, I started to see a wedge form and I drew my wedge and I said, “All right, if we start to break out of this wedge, I’m going to get short and see if we can get this continuation down to the next level which is down here at 9.40.” Now, I got short right in through here, right around just after noon. I got short at 10.23, and I said, “All right, if the wedge breaks, I will go ahead and add to my position.” Now, I was looking at the spy. I was anticipating this to fail and when I was looking at here is this, right in through 12:00. So we got this pullback, we rejected the highs, right? This is the highs that we rejected right before noon.

We pulled back, we test it again, but we couldn’t get up to that last relative high. I started to see this little roll take place and I said, “All right, let’s see if we can get this to break.” A couple of things I saw going on here, right? We had this sort of ascending support that was going on, a little bit of a speed line here. We are rejecting the highs, so I figured that if we could break this triangle and start to fade and the market starts to roll, we have really good potential that this GE is to follow through and break out of that wedge as well. You could see we kind of held the wedge here for a little bit, held it a little bit, and then we cracked again, came back and retested, failed and that was the confirmation that we were now going lower and you can see we moved decently lower to the afternoon lows and GE followed by breaking out of its pattern, right?

You can see we kind of grinded backup higher here when the spy did the retest, tested the upper side of the wedge, started to come down and look at the volume ramp on the resolution. You always want to see that volume ramp on the resolution. That’s what gave us the break. I added at 10.20 as we took out that wedge and we started the fade. Now, as you guys saw, I was up 2,800 bucks on this today. I ended the day of 2,800. I was down about 1500, I believe earlier, so I had to dig out of that hole and so overall it could have been closer to a $5,000 day if I didn’t take that loss this morning. But the fact of the matter is that I ended green. I came back and took another swing at it and was able to make it work and went into the day green.

I’m more than happy with the $2,800 day. I wasn’t expecting that after the stop out. So I’m gladly going to accept that as today’s win. But in any event, really important to pay attention to these trigger levels. When a trade doesn’t set up or it stops you out and you’re tempted to walk away or close out for the day, it’s always a good practice to kind of sit tight for a minute and just watch the action. There’s been, I can’t tell you how many different times that I’ve been stopped out of a trade and I actually just sit back for a few minutes and watch it and I see another opportunity set up and I take a secondary stab and I can’t tell you how many times again, how many big winners that’s actually produced by giving yourself a second chance.

Now, there’s different scenarios. If you end up being in the red quite a bit or at max loss, it’s a different story. But if you take a calculated risk and it stops you out, it doesn’t work, it doesn’t mean you have to end the day, right? If you’re not at max loss, you’re not taking revenge type trades, give yourself a second chance. We’re only human. So you have to understand that and there’s no harm in taking another stab at something that it didn’t work the first time. So, that’s the lesson today guys. Just be patient with things and don’t be afraid to take another shot at something even though your first one wasn’t that great. Could have just been a simple mistake that you made. Like I said, oftentimes when I give it time and be patient about it and give it a chance to resolve, we often will see the movie play out how we originally anticipated and that’s how we can take advantage of those situations.

So anyway, good trade today. Ending the day nicely up 2,800. Be back at it here tomorrow. A quick side note here. IBM, guys, is just doing an incredible amount of work here to the downside. We’ve been short this thing since the trendline break at 1.32, 50 via puts at just over two bucks. They’re now trading over $12. So I’ve taken three quarters of position off, some at 5, some at 9 and now I’ve got some left here. I’m going to give this a chance and see what we can really do. I do think this thing, it’s hit my first two targets. First target was 1.25. Next target was 1.17. The next target on this is going to be down near 1, it’s a little bit supported through 1.13, a little bit of a gap. So if we go back over here, let me show you exactly what we’re looking for. For those of you who are following this trade and are in the puts, so a little bit of gap right in through here around 1.13.

So that’ll be interesting to see what happens there. But then we got gap fill at around 1.10 or 1.11. So that’s going to kind of be my ultimate target on this is 1.10. There’s a pivot in through here if you look, pivot in through 1.10. You could see it’s tested that level several times right in through here, got above, came back, cracked below and really sold. So there’s a definite pivot into that 1.11, 1.10 level and I’ll be watching that very closely because that’s going to be in my back of the mind target on this. It’s just an incredible trade. We got some news out the other day that, or Monday, yesterday that they were acquiring RHT, which couldn’t be any better for us and it’s got potential. It still has plenty of potential. That’s the reason I bought the far out December puts is because these types of macro trend line breaks we often see play out over several weeks or months and I, in no way, was anticipating it would happen this quick.

Just the market role in addition to some news that came out on it was very helpful for our situation. But nonetheless, these macros trading setups do work and when they do wor k they provide massive winners and we’re there to capture them via the puts. So any event guys, that’ll do for today. Going to wrap it up and be back here first thing tomorrow morning. Oh hey, I didn’t see you there. Well, I was just working on the dream board for my next home run trade. Hopefully it comes soon. Until then, make sure you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing.