Warrior Trading Blog

+$2K Tuesday On $SNAP | Mike’s Trade Recap

Hey, what’s up guys? We are up 2000 for this Tuesday morning on one trade on SNAP. We got a really nice move here out of the open, and I was able to capitalize on a really solid technical setup that I’ve definitely want to take some time to explain to you guys in this recap for today. So stick with me here and we’ll review today’s trade on SNAP.

All right. Good afternoon, guys. Time to recap a little bit of this morning’s action. We actually ended up with a pretty decent day, relatively speaking. Coming into the day we really didn’t have much that we were excited about, even with the market gap up. Typically those days are tougher to trade anyway, so when I see a gap in the market I’m always a little bit more cautious about what I’m trading, because a lot of the stocks are affected by that gap. Now, kind of an interesting day for me in that I didn’t trade until after 10:00, actually closer to 10:30, and typically by that time of day, if I haven’t taken a trade, I’m usually closing down because I know that I’m most effective in the first half hour of the day. And, well, if I don’t take a trade at that point, that’s a really good sign that we’re not going to see the momentum for the strategy that I’m trading on the large cap.

So, but today we waited it out. I wanted to sit really tight with the SNAP. There was a good technical setup on it and got a nice trade, pretty decent trade, just over a 2,400 bucks. So I’ll take it, you know, it’s a pretty solid trade on a stock that doesn’t trade with that much a range, and we got a nice resolution out of it. The market was in our favor, so we’re able to make that work. So let’s take a few minutes, talk a little bit about what I liked about this trade and a couple of different things going on here. One was that if you looked at the news on this, first of all, it was gapping up, right? It was gapping higher. There was some interesting headlines out on this the last several days, and what I noticed is that we had a number of upgrades over the last several days, and when you have one upgrade just on a random day and a stock’s moving, typically I don’t pay any attention to it.

I don’t really view upgrades or downgrades as any sort of catalyst on a stock. Now, when you have a bunch of different firms leaning the same way on a stock, that’s different. And what we had on SNAP was essentially that just over a period of a couple of days. So coming into the end of last week, we started to see some upgrades rollout on SNAP. We saw a big bullish call sweep, a couple big bullish call sweeps on Thursday and Friday of last week. I noticed that in the headlines when scrolling back through the news on SNAP, and then today there was another upgrade, so someone else jumping on as well as the market moving higher. And when I saw all that, that type of stuff doesn’t happen as a coincidence, right? People are positioning, big money is positioning for a reason, and you need to cue in on those subtle cues that you may find in the news.

Now I will say that I typically am more cautious just in general on trading in general upgrades and downgrades, but when you have a situation like that, as I said, you have a bunch of different firms leaning the same way on a stock, especially on a higher profile stock, you typically will get movement, and that’s why I wanted to watch SNAP today. In addition to that, we had a really nice technical setup. So if you look at the daily on this, what I want to show you here is we had this pivot at 1450, right? This was a recent pivot point, and it was also right in the same zone as we had kind of a recent high that we were testing the last several sessions. In addition to that pivot at 1450, what we had over here is a very short term ascending resistance.

Now, one thing to note on ascending resistance, ascending resistance is the most difficult resistance to break. It takes the most volume, so it was really important we waited for the volume on this trade before we took it, because ascending resistance is the most difficult to break. You need volume into the move, extreme volume, for this trade to actually work or any trade that is moving into ascending resistance. As you can see, there’s a pretty well-established line here. There’s a recent pivot in the market connected with a another recent pivot in the market. That was a line I definitely wanted to watch, and also it correlated at the same exact spot as that 1450 pivot. All right, so what’s this called? The point of confluence. A point of confluence is when you have more than one point of support or resistance at the same spot.

Why do you want to watch these? Well, these are typically the levels that are going to produce the big moves. The stock can move through a point of confluence. You’re typically going to see a big reaction. All right, why did I have this 1450 pivot here? Well, what I liked about it was basically this is where obviously we gapped lower here. This is where we came back up. This was the high point of the retest before the next huge leg down. All right, so again, using extreme points in the market. For any of you that have been through my course, you know that we’re only really focusing on extremes, and that’s all I want to be interested in. And being that this was an extreme move before another extreme move down, this is a level I wanted to watch because this is the last time it was able to get this high.

All right, and that’s why I wanted to use that 1450 pivot. Above that, there was really no other resistance until this little pivot in here where we came back to retest, which was around 16. So if we got through the 1450 confluence point of the pivot and the ascending resistance, we had really good potential for this thing to move up into this pocket. All right, so I wanted to watch this very closely. Again, it was in play. There was people watching it, people positioning in it, and when you have that sort of action and a technical setup matches it, you don’t want to write it off. All right, so when I saw this, right, we had the technical setup.

I was watching the five minute. Now, kind of interesting here this morning what was going on. I had a feeling this morning that out of the open, being that we didn’t have much range from where we were opening up to the resistance we had, if you were lucky, you had about 30 cents at the max. All right, but that’s before you ran into the trend line and the pip. Now, my fear was that what I talked about in the chat room or for the open was that we might see a quick surge on this, test the resistance, and that might be it, right? So I’m not going to go long out of the open, because we don’t have enough room to really let this thing open up. If this level was up here around 15, sure, I might’ve tried it for an opening range move, but being that we had resistance so close and heavy resistance, I did not want to go long into that.

So obviously what you see happen here is that come up test, we pull, we’re still holding VWAP, tried to break down, false break, came back up. You can see. Did not like that trend line. Every time we tested it it got a hard pull, but also we held higher low. So I was watching, watching, watching. We never had really the volume come in outside of the open. As we started to try to push through that line, I was really watching the volume profile, because this needs to see high volume to break through such a heavy resistance point. Remember, I said that ascending resistance requires the most volume to break out of all resistance. So being that we’re not really having a huge ramp in volume here, I wasn’t really wanting to try it. So what I was also watching was the market at this point.

The market was kind of pulling off the ties, and I was still sitting tight with it. I was watching the price actions, we were testing these levels, and we got this pullback here., And what I noticed is that it was a lower volume pullback, right? It was lower volume pullback here. Then we started to ramp back up and what I saw was a very subtle cue on my fast timeframe. I started to see the volume pour in around, I think, 10:28, 10:29, and that’s where I took the position. So let’s go to the fast timeframe. I’ll show you what I saw on this. And I took a position to start. So here’s what you had. You know, kind of the first half hour, hour of the day, you can see you’re just kind of channeling sideways. You’re rejecting the trendline, you’re still holding VWAP, but you’re not really making any sort of significant move.

But then right in through here, look what happens over here. This big surge in volume starts to come in as we start to approach. We’re not even to the line yet, right? We’re not to that 1450 line yet. So what I saw is this volume starting to pour in as we’re lifting up and away from VWAP, and we’re basically gaining momentum going into the level. So I anticipated this a little bit. Once I saw that volume start coming in around 10:28, 10:29, I started to take a position at 1440. All right, I hit it a couple times with some big blocks. I had 12,000 shares, and it started to push, right? It started to push and got a nice move here right through, and I sold a good portion of the position, I think 5,000. As we push through, 1453 is where I got filled. All right, 1453. Now what I wanted to do is see if we can hold over this line.

Now, I know that’s only about a 13 cent move from my entry, but have to remember that’s 1%, and 1% on a large position can be a very good amount of money. So I wasn’t expecting a whole lot out of this SNAP. I was just trying to pull some profit out of it, because it was a very strong technical setup and I did not want to just let it pass by because it was 10:30 in the morning. I knew there was an opportunity on this, and I wanted to try it if it did set up. So again, I sold some as it came up [inaudible 00:10:10] 1453, and I held it as long as we held above this resistance that we had formerly put in against the trend line. So as long as that trend line held, I was fine staying in.

And, plus, it was going to be a break even stop or better. All right, so I sold some through here. We kind of consolidate, consolidate, consolidate. Look what the volume does, right? Once you break through that, look with the volume does. It drops off, right? This drops off. It’s doing nothing. Very low volume pull back. It’s very good to see. Back to the five minute. Look what happens here once you get above that level, right? Once you get above the level, this is the level that we’re talking about. Look at what the volume does. All right, so you have a ramp up in volume, and then it just totally dies off, which is what you want to see. It’s a low volume pullback. All right. Low volume pull back, which is the the most perfect scenario you can have once you break through a level.

All right, low volume pullback and then we start to ramp again. All right. I sold some as we move through the 70s, or I’m sorry, the 60s, and then I was … I actually at my last order at 1479 for the balance of my position, and the high of this candle hit 1478, and then what happened was we had a market move here that I took the rest off. So I was watching this in real time. I saw this big sell down in the spy, this hard move down on volume, and I said, “All right, well, maybe this is the end of the move up today, and this probably is going to weigh on SNAP, so let’s just take the profit here,” and I sold the position as we had this hard move down on the spy. So back to SNAP, that was right around this time right here.

So what I was watching real time is I got the pool, gave it a few minutes, started to pop back up, look like we wanted to try and go, but then we couldn’t, and I just sold it somewhere in through this level here. 1471 I think is where I got filled, but just wasn’t continuing, And so I decided to take the balance of the position off, but still a good, solid trade. We did well on it. It did end up making the move up towards 15, which is where we said that today would probably be a likely target on this potentially continuing through this pocket tomorrow up towards 16. All right, but you can see on the fast time frame, where would my stop have been as I entered this? Pretty tight, right? Pretty tight. This is a go, a breakout or bail out type situation.

Basically, my stop would have been at kind of the low of this pivot right here. All right. So once we started to ramp up off of this and the volume started to come in, I got long. 1440 I stopped. Would have been about seven cents away right at this last higher low pivot. All right, so pretty easy to spot your stop there. Always going to be a pivot point, the last higher low if you’re long or the last lower high if you’re short. All right, so next read on SNAP. Again, that technical setup was really important. That confluence point, you have the ascending resistance with the pivot. We started to break that on volume. It doesn’t get any better than that for what you want to see when your setups are resolving. All right, you want a big technical setup and then you want it confirmed by volume.

Really important stuff, because those are the ones that are going to make the stock move, and sometimes you have to wait for it. Sometimes you are not going to see it happen in a day, so you have to sit tight and not trade. But when it does, it’s important to be aggressive on those, because those are where your best trades are going to come from. So that was SNAP today, guys. Definitely was able to pull out a decent one on it, and we’ll get back here first thing tomorrow morning and see what else we could find. So everyone have a great evening, and see you all back in the chat room at a 8:00 AM tomorrow morning.

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