Warrior Trading Blog

Mike’s Recap: 2fer Tuesday! | Mike’s Trade Recap

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What’s up, guys. Well finally a sign of some momentum back in the markets. We had two really great trades this morning, which gave us instant gratification on some follow through that we really haven’t seen much of lately.

 

It’s been kind of choppy and inconsistent through these summer months, but we’re starting to see a little bit more resolution and momentum enter the markets as we get towards the tail end of summer, so let’s take a few minutes, break down today’s trades, talk a little bit about the market conditions, and understand what made these trades work so well today.

All right, guys, let’s jump into the recap here. Really great morning worth of trading. Too many opportunities to handle at once, but was able to take advantage of two of them. Got two really great trades and was able to stop well before 10:00 AM, so let’s take a few minutes here to break down the trades and talk about the action that we saw. So couple names on the watch list this morning. We had YY, we had HUYA, we had AAP, and we had TPR. Now, I want to go through all four of them and break down why they were on the watch list and the setups that we were looking for.

So YY, we’ll start with that one. If you look here on the daily chart, we had a really nice break down. This stock’s been weak here for several months and was gapping down hard this morning and into a very decent pocket which was between this 84 and 75 and a half. You can see there’s a pretty well-defined pivot in through this 84 level, and then it’s a straight shot down to 75 and a half. And then once you get through that 75 and a half, you did start to open up a little bit more and potentially down to the 65 level. You can see there’s a real nice pivot established here over the long term around the 65 level. And I was looking for it to potentially continue if the market started to sell off below it’s 20 day moving average. But it had held it this morning, and that’s what’s holding this stock up and not allowing it to continue down.

However, we’re able to still get a really nice trade and what we did on it this morning is I said that this thing was trading mid-range in the pre-market. And I really wanted to wait for it to break down below the pre-market lows to take a position. Now, I typically don’t trade stocks that are trading mid-range, and the reason for that is is they’re a lot less predictable. If the stock is up against a support level or a resistance level, it’s much easier to predict which way it’s going to go, and the chances of you being successful in the trade are much higher, as opposed to a stock trading mid-range where it really has no support or resistance. It’s a lot more difficult and it’s not skewed in your favor as opposed to being up against a support or resistance level.

So what we wanted to do is at least take out the pre-market low, and that’s what started to happen over here. And as we started to approach that level, I was watching it very closely, and I started to get short YY. If you look at the 15 second chart, can zoom in a bit and I will show you where my entry was taken. So if we go back here this morning, what I liked on this is we started to break down. We failed the initial pop. That’s always important on the gap down is where we try to pop and we failed at. And we started to roll back over. And as we started to come down through this pivot right here, this is a very important pivot because this is after the failed pop.

We start to pop a little bit here, but then that’s failed. So that’s really the tell tale sign that all right, this thing really is weak, there’s no buying coming in this. So as this descending triangle, if you will, started to break, I got short 7920. 7920 got short. Anticipated the breakdown of the lows. I covered some down through 7860s, more through 78, and I covered the balance as we blasted through 77. Now obviously this thing continued quite a bit more beyond that, but we got the move that I was looking for right away, and the price action on this was pretty difficult. It was kind of spready, it was jumping around a little bit, and I really didn’t want to overstay my welcome.

So we had a really nice trade. It resolved really quickly and along with the chop that we’ve been dealing with here for the past several weeks, it is really nice to have this instant resolution. So I decided to take it and be done with that trade. So you can see it’s all about pivots guys. All my trading’s about pivots around very specific support and resistance levels and this granular action will really tell you which way the stock’s going to go. So it’s very important to study pivots and understand how they work and represent the action of the stock because they will greatly increase the success rate of your trading.

So that was YY. Next one we traded was HUYA. Now, this one was a very quick trade. It didn’t end up resolving. We tried to anticipate a breakdown, which we were still able to get a very nice profit on it, it just didn’t continue because it caught support. So if you look at the daily on HUYA, you can see we’ve got two big levels very close by. So the first one is going to be this 2860, which was a very critical level. It has since broken that. It’s now testing the next most critical level at 2750.

Now, if it breaks down through this 2750, it’s got a massive window down to roughly 19. And what I was talking about this morning is that I’d like to see it break down through at least 2860 and then we might be able to anticipate the breakdown, because we’ve got a point’s worth of breathing room, so we can at least try to get a trade started. And if it breaks down and starts to really open up, wonderful. If it doesn’t, we can at least get out with some sort of profit, or at least, at the very worst a stop break even.

So can see very big support level in through here. And what I did this morning is as I saw this start to get through this support level, just after the open I got short. So let’s dial in to a faster timeframe again, 15 second. I’ll show you exactly where I got short on this. So again, it’s all about the pivots. And you can see here this morning what happened is we sold of a little bit, I always wait for a pivot, put in the direction of the way I’m looking for the trade to go. And what happened was is we dipped, we popped, we couldn’t break the high and we started to fail.

So as that happened, I got short at 2820 as we started to come down through here and I covered some as we broke through 28, down through 2780. I covered more at 2760. And we started to pop here a little bit, and I said, “You know what? I’m out two thirds of the trade. I’m going to hold it till breakeven. Let’s see if we can get it to break down through the pivot. If it doesn’t, I’ll stop out breakeven and still have a pretty decent trade.” And it ended up coming back and I stopped breakeven as we came back through 2820.

So very quick trade there, but we were able to capture a pretty nice move down to the pivot level. Just didn’t continue, but now, later today, it looks like it just tested it and it held. So again, this is a very big level here. If that level gives way on HUYA, something to keep on watch for continuation over the coming days, because this is a very critical level, especially since you’re below this 2860 now. So keep that on watch, but HUYA was just a quick trade out of the open, captured some profit on that, and we switched over to YY.

Now, there were two other nice names that were in play. This TPR, very nice set up to the long side. Couple things going on here that I want you to take a look at. Technically, just an incredibly strong chart because you’re back above all your major moving averages, your 100 day, your 200 day, and your 20 day. You’re also back above a very critical pivot in through 4875. 4875 right here, big pivot, well-established over the past year. You can see, starts over here, tests in through here, it gets above and goes to highs. Gap below, retest it from the underside and fade. Test, test, now we’re back above it this morning and we’re inside this big gap from 4875 to 5350.

And what I was liking out of the open is that if we’re able to hold above the gap entry, which was right here. And we were able to get back above that VWAP, you had potential to get to that gap fill point, and you could see what happened is great volume out of the open, and just continue. A little bit of a whipsaw action in through here, but ultimately, if you were able to position yourself properly at VWAP, VWAP buy this thing, which is a strategy that we teach, you were in very good shape. Nice grind move up to the pocket. That’s your target, you’re out nice trade.

So technically on this TPR it’s a gap trade. These are types of long set ups I like because you’re gapping up in the pre-market, you’re holding higher lows, you’re making higher highs, you’ve got a great technical set up, you’ve got room to run. These are high probability long trades. All right, so that was TPR. Next one was this AAP. Didn’t trade this one, the volume was a little bit light for me, but I want to talk about the daily set up on this. So the daily set up, you can see it’s a massive macro channel … Or a macro wedge. This thing’s been doing this for back since 2011.

Now what’s important about this is it breaks. The channel breaks over here at the bottom side. And we come back up and get back above it. So we re-enter it, but now we’re breaking out of the descending resistance line, which it all is at the breakout point, which is very interesting. So the reclaim spot is at the same point of the breakout spot of the descending channel, which tells you that this thing has really reclaimed some ground here and is becoming very strong. This is a major macro set up. I would not be surprised to see this thing continue to run for several days or weeks, even longer than that if the market cooperates.

But massive macro set up here to the long side. And I really liked it because you had a lot of room to run. Bullish as can be. And where you can see what happened out of the open, definitely some whipsaw movement, but again, you’re staying above that VWAP and you’re holding up. You’re getting above those pre-market highs, that’s where you’d want to look to take a position as you start to confirm and hold over those pre-market highs, which is going to be right in through this 155 level. And you get a really phenomenal trade to the upside to capture that move.

So again, a lot of great opportunities today. I was able to take two right out of the open and make it a nice day. So good way to begin the week. I did not trade yesterday. But today, we were able to get these two off and hopefully we’ll start to see some action continue here and a pick up of momentum as we approach the tail end of summer. All right, so that will do it for today, we’ll see everyone back here first thing tomorrow morning.

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