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Warrior Trading Blog

Breakout or Bailout! -$320 | Mike’s Trade Recap

Mike_7.30

Hey. What’s up guys? Well, today is a small loss on the day. Only $300 in the red and decided to shut it down. We had some major disconnections in the market. We had a big gap lower, but then the dip got bought. We had a lot of stocks gapping lower. So, when that happens, it’s definitely a tougher day to trade, which we’re able to see before the market opens, which is a good thing, but I did try one trade.

Once the market dip was being bought on a long-sided position to see if we could get a breakout, but just didn’t really want to move, and I wasn’t willing to wait around. I like to see that breakout or bailout situation take place. Since it wasn’t breaking out, I decided to just call it a day and sit tight into the afternoon. So, let’s take a few minutes and review today’s action in the recap.

All right. Good morning, guys. Time for a quick recap here of today’s action. I just want to spend a few minutes just to talk about this morning’s trade. I ended the day in the red by 300, a small red day. That’s okay. We just took a start position on PG to the long side here. The setup to the long side was really good. The market started to turn around off the gap, and we’re trying to see if we could get it to continue to push higher, but it just stalled, which essentially killed the PG trade. I decided to stop out. Very tight stop loss in place just in the event that it didn’t want to go.

So, again, small loss on the day, 300 bucks, relative to the type of trades that we typically take. This is just the cost of doing business and attempting to take a stab, and the trade didn’t work. Just get out of the way and reevaluate for a later potential trade. So, anyway, PG. Let’s take this and break it down a bit for you today.

First off, earnings on the name, and we had a really nice daily chart here. Pretty strong uptrend breaking through major ascending resistance and clear skies, right? Really nothing in its way to stop it from really pushing higher. These are the types of longs that I really like to trade because you don’t really have much in the line of resistance for at least the immediate future. So, that’s why I definitely like to keep a close eye on these, especially if you have the market in alignment because these are the ones that are likely to run the hardest.

All right, so that said, you see the ascending resistance that we had. This goes back to about April of 18, so relatively long term and pretty well-established. We got through both of those. We got to the pivot high, so we had a nice room above it to push, and I wanted to keep this on watch. In the event, the market gap lower was bought, right? So, today, what we had on the market first off was a hard gap down. These days when the market gaps in one direction or the other, significantly, there’re always tougher days to trade.

It’s just the nature of the market because you really don’t know if the move is in the gap, and we just go sideways and chop out for the day, like we did here today, or are we going to continue? You really don’t know that until you have at least the first 15 or 20 minutes price action under the belt to see which way we’re going to go. So, being that we had a hard gap down here, I was definitely cautious on the short trades, which we’ll talk about here in a moment because we had some major supports sitting right at 29960, which we essentially bounced right off of.

So this 29960 level was a big level on the daily chart. I’ll show you where that comes from. 29960 we can see comes from here. It’s the level that we broke down from just last week that has been holding impressively well. I mean, it’s held up really nicely, and today, we’re holding it again. So, being that we were gapping into this level, I really wanted to be cautious of the fact that we could get bought up off this level, and it’s going to kill all the short trades that are gapping lower this morning.

So, that’s why I’m saying that the days of the market gaps in either direction. Substantially, you need to be very cautious because they’re just tougher days to trade, right? I’d much rather the market open flat and start trending out in the open because that’s much a easier price action to trade with or trade alongside with. So, that is the market. We got bought off the dip, and that’s why PG started to look interesting to me because I was watching this in the morning, and I said that, “This would look interesting for a gap fade if we got below this 121 level.”

But that took place too early in the pre-market, and that move made its move. When that happens, I typically take it off the watch list to that side, but I kept on the watch list for a long. If we started to get back above and the market came into alignment, again, because the daily chart had a really nice technical setup.

So, what we did on this is once the market started turning around, I watched this move for the first 30 minutes or so, and we started to get this move through the highs, and I wanted to see a pullback happen. We never really got that even on the fast time frame, right? Even on the fast time frame. If you look here, where we started to watch the trade take place was… This is as we started pushing through the VWAP, the market started turning around, and I wanted to see it over its high and get a pullback or a pivot, which it never happened, right?

So here’s the high of day or the initial reactionary high out of the open, and you can see once we cleared above it, we just went straight up. We never got that pullback and pivot kind of like you did here or here. So, I wanted to wait for a pullback. So, I waited through all of this. I waited for the pullback to come all the way back to this pivot point, and once we double-bottomed into this, this is where I started to look to take it long.

We came all the way back. Nice orderly pullback, low-volume pullback. Started to tap it once, and again, I always want to see a pivot put in or a high or low, something to tell me that it still has strength. When we got this double bottom, so just a slightly higher low, and then we cleared this pivot right here. We cleared this last relative high pivot right there, 120120. That’s where I started taking it to the long side.

Now, if you look at the market at this time also… Go back to the market real quick. If you look at the spy at this time of day, you’ll see around 10:20 AM, you’ll see that we had this big pullback. We got the pullback here, and we started to come back up, and we cleared that last relative high on the spy, all right? So if you look at a five minutes, probably a little bit more clarity, you can see here that we got this big sell, and we started to come back up off the VWAP.

So if you look at it in real time, this is what I was seeing here. Big move up, pullback, hold VWAP. We start to resolve higher. If you look at PG at the same time, you’ll see the same thing happen. So, back to PG, and you’ll see here looking at this in real time. This is exactly what’s happening. We came back to VWAP, and we’ve started… I’m sorry. It was before that. It was right here. We come back, and we started to round back higher, right? Round back out right there.

All right, so it was in alignment with the market. We had good potential on this, and if it pushed, big potential to the upside. So, back to the fast time frame and what I was watching for on this. This is just to continue higher and hold that 120120 pivot. So as you could see, this is where I got long. As we started to break this 120120 pivot, my goal was to get up through the highs first, and then I would add to it. We started to look okay. We started to move up a little bit, and I was thinking that this might just be another pullback to put in a high or low.

But I did say that if we crack this 120120, this pivot that we cleared that signaled the trade, I was going to stop. So, a very tight stop, right? I had 2,000 shares of this. I had 120130 was my average, and I was going to stop at 120120. So, essentially, a 10-cent loss was my goal. We started to turn over here, didn’t really like this, and then we got that move, and I stopped. I lost 15 cents on 2,000, so that’s… I have a little bit more than 15 cents, so that’s where I got in the red by 320.

But again, good potential on this. If it started to move higher, it had all the criteria to move higher, especially that daily chart. The market was in alignment. It got bought off the dip. So, it looked really good for continuation higher, and we gave it a shot, and it just didn’t work. It’s one of those days that just didn’t work. But if it did work, it would’ve been a really nice trade and probably caught some nice momentum through the highs to the upside.

So, that was the trade for today. Small red day, unfortunately, but that’s that’s just the way it works sometimes, and it’s obviously nothing that we can’t make back in one trader or whatnot. So, that was PG. A couple of the names we had on watch was this SSNC. This one had a really good technical setup with this big pivot at 50 bucks, but it had a circuit breaker on it, a short sale restriction, and it was pushing 20% on the open, 20% gapping lower, 20%, 17%. When we start to approach that 20% mark, I get really cautious because that’s when we typically see just a reversal, or we don’t see continuation.

So, I’m really cautious on that. Plus you have the SSR, and I actually try to take this trade out on the open as it was starting to sell. I just couldn’t get filled. Spread was really wide. You had to get filled on uptick because the SSR rule, and I just couldn’t get filled. So, I said, “You know what? I’m canceling my orders on that. I don’t want to be filled on a whipsaw uptick.” Plus the market dip was being bought, so I canceled that. Glad I did. It didn’t really continue.

Got a decent move out of the open if you were able to catch it, but the spreads were wide on the open, and it was tough to get filled. So, didn’t take that one. We had UAA. That was the other one that we had on watch. If it broke below the 200 day, and it started to look like it was going to do it here as we started to come crashing in this 200 day, but we didn’t get the close below, right? Close below is important. Plus the market dip got bought off its pivot level, so that’s something that’s really important to recognize that if a market’s not continuing, it’s unlikely that these stocks will as well.

So, one thing I want to show you on UAA why I didn’t take the trade. I considered it, but for the fact we didn’t get the five-minute close below, and I’ll show you something here in terms of price action and volume that took place that kept me out. So, you can see here, if you look at this move on you UAA, so we have a pretty decent move down here, right? But look what happens as you break down through the 200, okay? Look what happens here in the volume. See the volume? This is the break of the 200 right here. As you come down, the volume is decreasing right here, all right?

As you test, look at this retest candle. Look at the volume spike on the retest candle, and then you get decreasing volume as you’re pulling away from the 200. That’s telling me that there’s not a lot of sellers there, right? The volume should be doing the opposite. It should be increasing as you’re pulling away from the 200. But since we were decreasing away from the 200, and then you made a higher low, then the volumes started to increase again. That tells me that the buyers were outpacing the sellers.

If you’re at the 200 day and the market dip is being bought, stay far away from the short side. This is another stock that was pushing down 20%. So, when all those things come up, it keeps me out of those trades that will turn into something nasty like this. Now, why didn’t I buy this off the bottom? Well, I didn’t really like the setup for a long. I don’t typically trade reversals. I was watching the PG for a continuation. That was where I was looking to take my long trade.

But in any events, it was a choppy day. There’s not really much action out there. I know BYND made a big move. The stock, I just choose not to trade it because it doesn’t fit within my risk parameters, but a lot of scalping opportunities on this if you’re quick. Good volume profile on that, right? Big rip out of the open. Some low-volume pullback, volume ramp into the breakout. Same thing again over here. Low volume pullback into the mid morning, volume ramp up. That signals that the move is taking off.

So, definitely some good technical indicators on that one and some opportunity if you’re a scalp trader. But for me, it doesn’t fall within my strategy, so that’s BYND, and we’ll get back at it first thing tomorrow.

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.