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$NFLX for +$6K! | Mike’s Trade Recap

Mike Recap 4.17

Hey, what’s up guys? Another phenomenal morning here at, Trading, the action’s definitely back with a help of some earnings. We are up over 6,000 bucks trading Netflix to the short side after their earnings report.

Take a few minutes here, I want to breakdown this trade, talk a little bit about how we were able to pinpoint this entry, our add-back technique, and our scaling-out technique. Let’s take a few minutes guys, and breakdown this Netflix trade.

Good morning, guys. Well, it is time to do a recap already, here, today at 10:30 a.m. We are done one hour into the day, here, and a nice morning at that. We’re able to hit Netflix on the earnings day for just over 6,000 bucks. A really great setup on this, starting to play out really well, and was able to even to add-back on the trade, to add to the profit. Nice, nice week here, so far. It’s good to see some momentum back in the market, definitely an effect of earnings, bringing some action into it. We’re taking advantage of it, just because it’s been so slow lately. It’s good to see that we do have some action to work with.

Now, let’s talk a little bit about how we traded this, and the action that presented itself. First off, Netflix had earnings. This crazy whipsaw move yesterday, after hours, got caught in between some major levels, here. We let it shakeout overnight, and came into this morning, and we talked about some very key things that were taking place. One of which was, this trendline, right here, this 374 trendline. If you look at the daily chart on this, you’ll see that this is some very critical, descending resistance. This descending resistance here is important, because it starts from the recent highs, and it gets some very nice interactions.

Now, the fact that it also topped out there on the earnings print, right on the after hours, you can see right to the line, and then big fade, bounce back up. This morning, it came back to it and tested it, basically double-topped and started to turn over here into the open. What I liked about this was, that we had, essentially, a double-top against a big level. This is a situation where we typically see a fade, when we have that type of setup.

What I wanted to see first was it to get below 360. The reason that was, because you had a lot of support in through here. You had a pivot, right here, a 360/180s. You had the 20 moving average on the daily. The 50 moving average on the daily, which is the blue line. Then below that, you started to open up into a big pocket, all the way down to, essentially, the 200 day. You can see what happened yesterday, once it got below those levels. It sold straight to the 200 day and 100 day. A big pocket to work with here, and I wanted to see if this could continue down through this, and get a huge move down towards the 200 day for a big trade.

It started to look good out of the open. We had our plan in play, and we, again, said that we had to double-top against resistance. If we start to get below 360, we’re going to be interested for a fade. Fast timeframe, let’s dial in and look at this, tell you guys how I traded this. Breakdown my entries, and where I covered, and where I added back. That was a key point to this is, it allowed me to, basically, double my profit in the trade.

We have here, on the open, quick sell to the pivot here of 360/180s. Definitely don’t want to go short into resistance, you want to wait until that gives way. Then that’s when you want to take a trade. First, move out of the gates is to the downside, it bounces off the pivot, comes back up, retest VWAP. Starts to come back in here, and this is where I started to like it. When I saw that we got back below VWAP, and we started to put this pivot in, right around 363s. Once we got that, and we failed, I started to watch it very, very closely here. What happened was, is as we started to come down through all this support, the 20, the 50, a trendline, I started to see some action that I liked. And I got short at 360, as we were coming down through 360, anticipating the further breakdown.

It was a little bit of an anticipation trade, but the fact that we rejected the highs, we had the setup overhead that we had. The market, look at this buy, look at this buy was doing this morning, just a straight sell, all the way down. That would really help this trade move. That was really important that we had that. That gave me a lot of confidence to anticipate the trade. Once that started to play out, I took a very small starter position, just to see if get it started. Then once I could confirm the break, I added to it. I added to it as we got the break through 360. I covered 358. I covered 356, and I covered it more at 354.

Now, we had the retrace come back up, I still had a quarter of my position left. We had a retrace come back up, back into all the moving average resistance, and we had a speed-line. Speed-lines are very short-term trendlines. Now, once that speed-line broke, and we rejected the moving averages, that is a point of confluence where you have a movement into very significant levels, and it’s rejecting that, and breaking the speed-line. A couple different factors there confirming that the move is going to continue. Once we got that break, and we started to confirm back below, on this candle here, and we started to break, I added 358/80s is where I got filled. Added back in my position, took some off at 356, more at 355, more at 354.

I had a quarter of that position, plus a quarter of the original position, half the position left. My stop was going to be back above this 356. You can see it. If you put in a little bit of a pivot here, it starts all the way from back here, and right there, calls some support. Basically, if you got back over 356, that was my stop. My ultimate target was going to be down here, at 350. But what happened was, we started to consolidate here, we broke above. I stopped out at 356/40 and called it a day, and was able to put in a really good trade. Nice move on that. My stock on this would have been, basically, a point. I basically give these stocks a dollar to start, and I had 1000 shares to start, so was risking 1000 to get started.

These higher priced stocks, I typically give a max backs of a dollar. If it’s a lower priced stock, our sweet spot of, say, 40 to 80, or even 100 bucks, I will utilize about 50 cent back stop. I used that dollar backstop and that’s what I used as my initial stop. Once we got going, though, I moved it to break even right away, as we started taking profits. That’s something that’s really important, especially these stocks that can move very quickly. So important to get that breakeven in as fast as possible, then just let the trade work.

Good trade here, on Netflix. Good lesson on when to add-back. Another reason I added back on here, as well, was remember the spy. If you look at the spy, at this time of day, 9:50. Go back, take a look at the spy around 9:50. You can see, it was just diving. There was no sign of any buy pressure on this, and that was another reason why I added back. Because we had a movement up in the price on Netflix, but the market was still moving down. So you have disconnect, and when you have disconnect, like that, and you can take advantage of it, it’s definitely something you want to do because that’s where you can really start to maximize your profits, is by adding back to a trade that’s still in trend, and still respecting of levels.

Great trade, guys. Great week. We’re putting in a couple good days here. Yesterday was really good, and today, as well. Remember the markets are closed Friday, Good Friday, for Easter, so the markets will be closed. Last day of trading is tomorrow, Thursday, April 18th. We’ll see everyone back here first thing tomorrow.

Hey, everyone. Thanks for watching the videos. I’ll continue to make sure that all of the watch list, 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.