Warrior Trading Blog

Friday Fireworks +$7.6K | Mike’s Trade Recap

Mike_5.3

Happy Friday, guys. Well we said we were going to end the week on a strong note and we definitely did it today. We closed our short trade on CTSH for up over 7,600 bucks. One single trade, so that easily takes care of our weekly goal and we’re coming now into the month on a very strong note so it will be nice to go into the weekend and come back first thing next week and start off strong. So take a few minutes here and we’ll break down this incredible trade we had this morning on CTSH.

All right guys, time for a Friday recap and it is a green one so today coming in to Friday of what’s been somewhat of an inconsistent week, haven’t really been able to get anything that great started. A decent trade yesterday to clean up the Apple loss on Wednesday, but that really only got us back to slightly in the green. But today, we take a step much further ahead and we’re able to lock up 7,600 bucks on this short, on CTSH. This is a situation where I constantly talk about when you have a home run set up, present itself, and you have everything you need to see that set-up resolve, you need to be aggressive, right? And that’s where these big trades come from. So let’s take a look here at the CTSH, talk about why it was so significant and how we’re able to lock up a win like this.

You can see 7,600 bucks, one single trade, CTSH. Here is the chart that we traded on this. So just go back to the beginning here. Gapping down this morning, or gapping down yesterday afternoon actually and holding those levels through the early market here this morning. What we wanted to see is what the daily looked like. So moving over to the daily you can see we had some major, major ascending resistance coming in to play here which was longer term. So this is macro support. Ascending support, you can see we start down here in 2013. We get a really nice anchor point on this high quality bar. Really important aspect of this is support resistance right here, is this high volume bar.

You can see that this was basically a point in the market where we sold off. Buyers came in and reversed it right back. And you have extreme volume, extreme volume. When you have those points in the market that you can anchor your support resistance lines to, utilize them because that will further validate your lines. Right, so we had that, connected it there, extended it out. That’s the line that came into this 5750. We had a little bit shorter term line right here that started at this bar, this high volume bar. I extended it out to this major pivot in the market and then extended that through.

Those are the two lines we had, and then as far as pivots go, those are the trend lines. As far as pivots go, couple pivots here that we want to talk about. First off, I want to talk about this major pivot right here. Big dip in the marketplace before we kind of bounce back up. This was the next most recent point of support. Major pivot in the market, you have to be sure that you acknowledge these levels because these are what allow these trades to really really move. And that’s why we’ve really focused on this, because my thought initially was if we can get below this pivot, if we can get below and then retest from the underside and fail, that’s huge, right? Because if we can retest from the underside and fail this, that’s telling us that this major pivot level in the market is holding and we can continue to move through this pocket that we’ve established here from 5950 to 5750.

Back out a little bit more. We have another major pivot that lies down in through here around 5150. As you can see here, bunch of tests from the underside after we got bought off that bottom. Got back above, retested, moved, came back, retested again and then moved again. So this is a very important pivot right here because you have consistency in price action. Price action on both sides where you held. All right, that’s what essentially establishes a pivot.

Now, a little bit more micro term. I typically would overlook this type of pivot, but there’s a major reason why I didn’t. Okay? And the reason is is because look at the volume that happens through this zone. I can see that there’s a pivot through here. We’re holding on the underside and we get above and hold on the top side. Then we really take off. So we have a big liftoff point off a major pivot, that further validates the line. And one other thing that I really liked about this zone right here is the volume.

So if you look down here at the bottom of the chart, you’ll see the volume. If you were to take an average of the volume, right, I can put the line somewhere in probably through this area here. So this red dashed line is probably pretty close to the average volume we see on this stock on a daily basis. Look what happens in this blue square. This blue square signifies the time that we’re testing this level up and through here. So the volume comes in, ramps up right in through here as we’re testing the top side of that pivot, dives off as you fail back down, ramps back up again as you test the top side of it. That being the case with the volume, that’s going to further validate that level. Hence why I put it on the chart, and then when I saw it correlated with this ascending support line, that’s huge. All right? This is what you call point of confluence. We have a point of confluence in the market, really important to watch carefully because those are the points that you typically get the explosive moves off of, all right?

Those are the support resistance levels that we had on this thing, and then once we started to come into the open market, my plan was really to wait until we broke the low, this 5950 pivot. Just because we didn’t really have much room to fade on this until we got into this pocket. So I wanted to just wait for the confirmation because once this pivot broke, we start to get into a big pocket. And that’s where the move really should start to open up, because remember guys, this was the major pivot point in the marketplace. This is this pivot right here, 5947, this big dip that we had in the market. That’s this pivot. This is not just some basic support and resistance level. It’s really important to make sure that you understand the difference of the levels that you’re trading around.

Is it simply just yesterday’s high or yesterday’s low? Or is it a major, major, significant pivot point in the market like this? All right? Make sure you understand and you acknowledge the value of the support resistance you’re trading around because it’s not all the same. There is differences. Being that we had that such big of a support, I wanted to wait til we got through it. Because once we confirm it through that, that’s basically failing that big pivot. Big potential for a home run trade. Now I have that established.

I was watching fast timeframe as I always do into the open, waiting for the confirmation to happen. Now, any typical situation, I would’ve taken this trade first. Right, we get the relay move out in the open, which is normal, a fail, which is normal, and then the fade, which is normal. I would get short right here and anticipate the breakdown. But the fact that we had this major pivot in the marketplace, I didn’t take it. I don’t want a short end to support, much less this type of support.

Once that happened, sat tight and just waited on this thing. I wasn’t going to touch it until we got a break below 5940. It was really important I waited until that actually happened. So kind of moved in later in the morning here, hit highs, and then it failed the highs, started to sell back down here into the late morning, watching it very closely, then we got the break. There’s the break, all right? Never short on the break. Always wait for the retest. Keep going, keep going, the retest happened really quickly as we kind of tested that. Hold back, I got short, and then 5940. All right, 5940, got short, and held onto this thing and just kind of waited. I waited a few minutes and we started to break. We started to break here, so I added a little bit on the 59 full. So I brought my average down to about 5920. Then, we came back up here and we were doing a … And this is an actual what I would call formal retest, a longer term retest, a five minute retest.

The reason I held onto this trade because I expected this. If you look at the five minute, we were extended as we were breaking through the pivot. I did expect a five minute retest, but just in case, we wanted to fill that pocket on the break because it’s such a big support level, I wanted to take a little bit of a position. But, what happened was, again, we did a formal retest on the five minute, which is normal. I actually added … I took some profit off here as we got down through 5860s, took some profit off. We came all the way back, retested the pivot, put in the double top against the pivot, and we started to turn back over. I added, all right? Added 5920s, we broke again. We broke again 59, added again, one more time.

Then I held the trade because I knew now we were going to probably see this move lower since we had failed the pivot, making lower highs, or failing 59. It really doesn’t get much better than this. All right, so then as we drifted, I took some off as we got down here and made this break through 5860s. I took more off as we hit 58, and then my final out was 5775. We really nailed this trade to the penny down here. Because we started to come in this big confluence zone. Remember we talked about having the big support zone here, two levels intersecting at 5750, back to the daily. Remember, we had that pivot, then we have this trend line. Pivot right through here, that was noted by the high volume, and we have the trend line. Same spot.

When I have big points of support resistance like this, I’m always out a little bit before. So I had my final bids sent down there at 5775 and got filled and was able to lock up a really nice trade. I had a good amount of size on this stock because again, it’s such the home run setup that it had, and just the technical setup. It was really, really clear and these are the ones that I really try to become aggressive on. Because you have the ones that make your week. One trade is all it takes, right? So really, really good job on this, guys. Some really good action, really, really nice to see some momentum action. And a really good technical setup. This is what happens when we have all of our criteria come together.

While it may not be every day, when it happens, they do provide these opportunities that allow for big trades. Right? So ending the first week of the month here really strong and we’ll get back at it first thing next week. Everyone enjoy the weekend.

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