Warrior Trading Blog

Bullseye! +$4K on $TGT | Mike’s Trade Recap

mike_8.21

Hey, what’s up, guys? All right, so I’ll be finishing up the day 4K for Wednesday here this morning on a really great trade to the long side. Thanks to Target, we’re able to lock up a really solid winner even though it’s still the middle of summer when trading is a seasonally the hardest time to capture momentum. But you’ve got to be patient, and when those setups present themselves you just become aggressive, just like today we’re able to capture that nice win. So let’s take a few minutes and break it down in today’s recap.

All right, good afternoon guys. Quick recap of today’s action. It was a good day. We were able to get one pretty solid trade here on Target, a huge gap higher on an earnings report, and was able to lock in just over 4,000 on this trade to the long side. But it definitely took some time to play out.

We had to be really patient with this thing to consolidate before it actually did begin breaking out. And there were quite a few points in time where this thing could have definitely been a headache to trade, and faking you out to get in. But we were able to kind of sit tight and wait for it to resolve until we could see the volume coming in. And that’s where we were able to take a trade and get the continuation to the upside.

So you can see over just over 4,000 on Target. Let’s take a few minutes and break this down. So first of all, the obvious here, huge gap higher on the stock this morning and that’s what brings it to our attention initially, right? Where we have this big gap higher. We want to then look into see what the news is and try to figure out what’s the reasoning behind this type of a move that we’ve seen here this morning.

And the reason for the move this morning was an earnings report that was a pretty good and I mean, it was gapping back above all resistance that we could really find and the resistance that we had was all in the form of trend lines. Some were macro, some were short-term. We had all different ones coming into play here and it really was pushing through all of them, which is a really good sign for strength.

Now first macro trend line starts back here. Expand this out even more so you can see, but this is really the macro trend that has had right on the uptrend. And we started with this pivot high in 2007 we extended it out to the next most major pivot high, which was in 2015 and then from there we extended it out and you can see where it falls somewhere up in through here.

But we started another one at the same spot connected to this pivot high. And we have that grouping of trend lines. So those are our two macro lines from 2007 and 2015 then we dial in a little bit closer to some shorter term trend lines that are also ascending resistance that you can see here. This one starts relatively short-term, but it does incorporate two important points, which is right here in April of 19 which was that kind of high of that a wave.

Then we have another high, which is just after that a few months later. The next trend line starts with a gap, all right. We take this gap and we connected to that high wave. We get a little bit different of an angle, but the thing to pay attention to here and the important part is that this is the big zone. You have a huge wall of trend lines below the stock, which typically means that is a ton of support.

And no one is really going to want to short the stock down into that because it doesn’t have much potential to really fade the gap because you’ve got all these well-established, long-term and short-term trend lines that are very obvious. So when you have that sort of set up, when you have a wall of trend lines below or above, and you have a lot of room to move, in this case, clear skies, you can typically expect that you’re going to see some sort of continuation move, right?

And that’s exactly what happened here today on Target. So dialing into the five minute, you can see these are all the trend lines where they fall kind of a wide range, but again, just understand that it is a big zone and it is a lot of support from all over a long period of time that creates this zone that provides a lot of support to the stock.

Now when you look at it from this standpoint, it doesn’t really appear to have a huge move, but we’re able to catch this breakout point after the consolidation and get a pretty nice move back up through essentially the pre-market highs that we had here. And we’re able to get a nice trade out of it.

So what I was looking for on the open as always on our long sided trades, we’re looking for a move through the pre-market highs and a confirmed hold above that whether it’s on a one minute, a five minute, a two minute, a faster timeframe, whatever you want to use.

You just need to see that there’s some sort of confirmation above the pre-market high. But what happened here, which was very interesting, is that on the open we had, or through the open, we had a very tight range of tradings. So if you’d go back and you look at the faster timeframe that I use to look for my entries, you’ll see that you really didn’t get much movement to this.

Remember, we don’t want to short it because it had too much support below and it was just not much potential in that range. We wanted it to go long, but the long wasn’t really until above the pre-market high. However, what happened here is we just went sideways for virtually a half-hour and I was waiting until we had some indication that this thing was going to begin breaking out and we didn’t get that until we started to see this ramp in volume come in.

So what you might notice here on the fast timeframe is on a volume profile basis, you could see that this volume was decreasing over time and then all of a sudden we had this huge influx of volume as you’re kind of breaking out of this a consolidation pattern or consolidate above [inaudible 00:06:15] gap or holding higher lows and you’re hovering just beneath a resistance point that if that gives away, it should open up into this huge window above.

So when I was watching for on this is that if we get the volume to come in, if we start to resolve out of this consolidation pattern, I’m going to try to take a trade to at least get it up to the pre-market highs and then I’ll add, if we hold above that and look for continuation, right? Again, typically I’ll wait for a move above the pre-market highs and hold before I enter.

But since we had enough room up towards pre-market highs and we had such a nice consolidation pattern with such a nice volume profile, I decided to try and take a trade on this to see if we could at least get it up to pre-market highs. And then again, if it holds I’ll add back and tried to get another move. So you can see the volume profile on the 24 second. If you look at the five minute on this, you’ll see also that you had a pretty nice volume profile play out.

So you can see here, look what happens in the first 30 minutes of the day. It’s just straight decreasing volume as you’re getting this consolidation. And then once you start to get this resolution out of this pattern, look what the volume does, right? The volume starts to surge. So basically what I was doing is once the volume starts breaking the pattern, just as if a stock price breaks a pattern, right?

That’s what I was looking for. The volume started to break the pattern here. This is likely the point in time where it’s going to continue. Okay? So that said, I was watching the faster timeframe and I took an entry. As soon as I saw that volume start to break out of that consolidation pattern. So I saw these big bars start to be put in down here.

I started to take the trade as we’re breaking through 100 bucks. All right? I got filled at a 110 and just wrote it from there, right? I took a position and I added on this pullback, right? We had to pull back and hold. Basically, what it did is it came back and retested this zone right here, right? Kind of where we were, where we were stuck. We couldn’t push through that, came back and retested that it held.

I added again, and then we pushed up here. I sold some through one-on-one. I sold more at one-on-one thirties and forties and then what I did is as we pushed right here through these pre-market highs, I added back, okay. So I added back to my trade and I sold more up through one-on-one nineties and then I actually had an order out at 102 flat. I got filled there and that took me out of half my position again, okay.

So I had still had half the position and was I holding too much at this point? Maybe I could have, but I was looking for that continued move really much higher looking for a really big home run trade and it just didn’t want to continue. It got stuck at that 102 level and my stop was going to be back below this pivot I put it at just below one-on-one 40 we started to get this crack here once we made a lower high in through here and we started to roll over.

I said, all right, well the strength has gone. We couldn’t push through on bailing out. Final out was one on one 30 on the balance, which was half the position. So we’ve essentially made the money in this move here and then a little bit more as we added through the pre-market highs. We’ve got another about 50 cents out of that move up towards 102.

Definitely a little bit difficult of a trader to get to work, but we were able to, again, all of the volume and that’s what’s going to help you identify the right point in time to actually take the trade, all right? And Target is notoriously kind of a tough trader. It can be a little bit a of a whipsaw name, but you know the volume was there today. The setup was there today and we had a good indication that it was going to try to make the moves.

We wanted to be a part of it. I didn’t want to wait this long to try it up here because we had a nice pocket from 100 up to a one on one 50 in about one and a half percent, which is definitely enough room to at least get the trade started and look for the big continuation if the trade really started to take off. So that’s where I traded it. It did make another move back above here.

Once it closed back above the one-on-one 50 level, again, you’ve could’ve traded it here and got a little bit of a move up towards one 103s it looks like one or two seventies, but again, I only really trade the first 30 minutes to hour of the day because that’s where the easiest momentum is. But you know it’s summertime and the trades are going to be fewer and further between.

They’re going to be a little bit choppier, they’re going to be not as big as continuation most of the time or as on a consistent basis as we will see the rest of the year. But there’s still trades that we had and we’re able to lock it in on this TGT. So definitely a good trade. I had a pretty sizable position on this.

I took a 2,500 just start, added 2,500 scaled out of that and then I added back above the one-on-one fifties, scaled out of half of that. And that’s what allowed me to lock in those profits on this. So good trade, definitely had the volume. Definitely have the set up. And that’s what you need to look forward to define these big winning trades. So that was Target. The only other one that I was watching that did play was this CREE and surprising move on this.

It really did move really nicely. It’s just the volume in the first five minutes was below my minimum threshold. So when that happens, I typically don’t really watch the stock much more. I have a minimum threshold of 500K traded in the first five minutes. And on CREE we only had about 360K traded in the first five minutes. So well below my minimum threshold. Could I have taken a smaller position to compensate for the lack of volume? Sure I could have, but I just decided to stick with Target.

I’ve got to really focus on one single stock to be able to look for those home run trades. If I’m trading more than one thing at once, it’s going to be very difficult to look for big winning trades consistently. So CREE was the one that made the move really, really vertical continuation move today, but that’s okay.

It’s good to see that there are moves out there and that there is other tradable names that are still moving. But today Target was our name and we were still able to get a nice trade out of that for the first hour or so of the day. So good job to everyone, and we’ll be back at it first thing tomorrow morning.

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