Warrior Trading Blog

A Red Day Recap! -$920 | Mike’s Trade Recap

Hey, what’s up guys? Well, yes, today will be a Red Day recap for me as I’m ending the day down just over 900 bucks, but that’s okay. With the good days come some bad ones and thankfully they are few and far between.

I want to take a few minutes here to break down the trade that we took while it was a home run potential setup, a lack of momentum in the markets the last few days has been very difficult to deal with and is affecting the trades that we’re taking. So really important to play a lot of defense and make sure you’re managing your risk properly to avoid any sort of big draw downs and that’s what we want to focus on today. So let’s take a few minutes and breakdown today’s trade and today’s recap.

Alright, good morning guys. I want to do a quick recap here on WVA. Now we tried to anticipate the breakdown on this after some short term consolidation and just didn’t work today. We manage it pretty well. I got out of the position, closed down ending the day in the red, just over $900 so it’s well within my max loss. I tried one trade on and added to it at a point where we had a good opportunity for it to completely reverse, and it just didn’t want to resolve in our direction today.

After that I just decided to call it a day and you can see it’s just flat lined and there’s not much action in this thing. There’s some really odd price action taking place And when I started to see those orders go through I didn’t even want to attempt it again. At the end of the day here, down just over 900.

Markets been slow, a big lack of momentum the last week here and it’s shown. Monday, yesterday, we didn’t trade. We didn’t even have a watch list because there was nothing to look at and today we had some potential on this WVA technically, but what happened here is it made the move into pre market, from one side of the pocket right to the other, to the penny, and that in itself was disappointing because that’s the move that we wanted.

Let’s break this down and talk a little bit about what I saw and how the trade played out. WVA earnings this morning [inaudible 00:02:24] down. What we had, technically, was a few different points and that is starting here with this descending support. It’s a nice, identifiable level of descending support and we also had a descending support coming in through here, alright? Those we had marked off first. If we go back a little further, we’ll take a look at the critical pivots and these are really nice because these are very well established and well respected pivots. These are the types of levels that I like the most because when they break, they typically break hard and they provide a big clean moves.

See a pivot in through here, drops us down to 55 and then from there it drops us down to this nice pivot that led to a breakout. So we get a breakout, pullback retest, form another pivot, breakout again and another pivot in through here. So a bunch of pivots lined up and those provide great trading opportunities and good places for a stock to consolidate and then further move. So those are the levels we had. We also had one longer term ascending support line if we did start to really fade. You can see that comes into play here starting back in 2009. A little bit longer term, ascending support. Definitely want to always look to the left and make sure that you have incorporated all levels of support and resistance because those major levels do play a big role when you do trade against them.

So those are the levels we had on WBA. So coming into the open today, or the pre market, this is what we saw. We had this setup right here, it’s when we were talking about it in the watch list and it looked really good. Had come into the support, you can see a correlation here between the trend line and the pivot. We were holding really well and we had a really nice potential move down to the other side of the pocket, which was down here at 5517 so we had high hopes for this doc.

It really had good potential if it could maintain this level into the open. However, as we start to get to the open, you can see it faded, made the move, came right to the level, right to the penny, and then bounce. So at this point, what do we do? We want to sit tight and wait for a retest to take place to see if we can get a more predictable entry points, and get through this support, and try to get a trade to fade down through this level.

So when the market opened I didn’t trade it in through here because it was testing the pivot it was holding. I didn’t want to get caught in a false break. I don’t short on the initial move into support. If we tap support and we’re just hovering above it and we’re looking weak, then that’s a point in time where I will take a small position and try to anticipate the breakdown and it’s exactly what I did today.

So if we look at a faster timeframe of this, I’ll show you what I was looking at on it, and what you’ll see here is that exact situation play out. So what happened is, obviously this fade into the open and test the support, come into the open, the bell rings, immediately fades, but again, I’m not going to short the initial tests and the support. Then we catch on the support, start to bounce, retest the highs, now we start to come back in and this is our first lower pivot high that we’re making. Right in through here, I started to short 5520s alright, 5520s I started to get short. We looked really good. Came to the support again, started to hold, started to move lower and again started to move down through the support here, 5510s, and kinda just held around. Looked good.

Then we had this pop and I sat through this. I wanted to see if we rejected [VU 00:06:11] app. Rejected the highs that we had put in and I actually sat through all of this because I only had a very small starter position because I know that I was shorting into support, but it was after consolidation and a double top, a lower pivot high and you were not getting as much of a measurable reaction as you were over here, which was telling me at that point in time, that the buyers were not nearly as strong as the seller.

So all that data is what led me to try a position short because if this broke again, it had potential to fade hard and fast down to this trend line here. So I had a thousand shares to start and just that tight with it came to VU app, we rejected, but we made a hire pivot low and I sat in through this again. I wanted to see what would happen because we were at a pivot in through this level. As you can see in the pre market here, that we were respecting and we came right up and we tested that, reversed off of it, came back below VU App. We tested VU app [inaudible 00:07:13]. We tested and failed. I added here at 5580 and that brought my average to about 5550s. We looked good here, started to fade again and again we looked like we were going to resolve here because we rejected the VU app.

What I did is I held on and I wanted to see if we could continue here, but as we started to come back up and retest again, we made a hire pivot low and it started to push through 5580s, which was VU app and I stopped. I got filled an average of 5590s and that’s where I totally stopped out because we didn’t end up resolving lower and yes, I took a little bit of a loss of today, just over 900 and called it a day.

But again, I would trade this again. It had a good look to it, had potential to break down here. I realized I was shorting the support, I understand that, but to compensate for that increased risk, I just took a much smaller starter position, about a third of what I would typically take, or half of what I would typically take on the stock of this price. I was compensated for that, giving myself some room to work with and that’s exactly what played out here. I had to use that room and again, I added when we had another pivot low back with the VU app, tried to get it to work and it didn’t. We had to play a little bit of a damage control on this today.

That was the trade on WVA and you can see now it’s just flat lining. There’s been some very odd price action on this into the late morning here and this is price action you don’t want to get involved with. This is complete chop. There’s not much direction in the market. There’s not much volume and naturally gonna make our job difficult. When that happens, we’ve just got to sit tight. So that’s what I’ll be doing for the rest of the day and we’ll be 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 lists, 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.