Warrior Trading Blog

Perfection! +$4,700! | Mike’s Trade Recap

Mike Recap 4.16

Hey what’s up guys? Well some hot action in the markets today. We were able to lock up a huge winner this morning in just 10 minutes, for almost $5,000. One single trade on a text book setup that we’re gonna talk about on the recap, but I wanted to talk a little bit about what exactly we saw today, and that was one of our textbook setups known as the gap fade. So let’s take a few minutes, I’m gonna show you what I saw, and exactly how we traded this to lock up the big win in under 10 minutes of trading.

All right, good morning guys. Well, time for an early recap here. It is 10:30 AM on Tuesday and we are done. We had a really fantastic trade this morning. Finally, have seen a little bit of momentum in at least one trade. And whether or not it’s a one off or whatever it may be, we had to take advantage of it, and that’s going to be UNH. We got this for a text book gap fade trade right out of the open, locked up just over 4700 bucks and we caught this huge move to the downside. So really nice way to come into the week here, decent trade yesterday to start and then this big winner today. And that really helps things after being very slow for the last two to three weeks.

So let’s take a few minutes and break down this trade, tell you a little bit what I saw on it and how we traded it. So the first thing on this, this morning when we saw it on the scan, on the gap scan, was that it was gapping higher, right? Now first thing we do is we look at the daily chart to see what type of technicals we have on it. And the first thing I noticed, right off the bat, was this daily chart was very weak, it was very ugly. Lot of overhead resistance, lot of traffic, very congested, just no real room to move to the upside.

So what I do I typically do in these situations? Well, I definitely don’t look long, I want to look for any sort of short opportunity, see if we can take advantage of that overhead resistance. And when you see charts like this, when you’re coming into all sorts of traffic, typically this is a situation where people who are in the stock will try to use this pop to exist. So any pop that happens as the stocks been down trending like this, is typically a point in time where people have been holding for a while. They just don’t want to hold or be part of it anymore and they throw in the towel and they use these pops or gaps up to do that. And was my initial thought today is that we potentially could see that happen if the market does fade the gap because the spy was gapping as well.

So when I saw what the spy was doing this morning, that we had this gap higher and we were sitting kind of lower highs into the open, typically we see these gaps fad, at least initially. And that’s what we talked about, the watch list, is that watch for this gap fade, at least into the morning hours because that will help drive trades. Because a lot of the stuff was gapping, was market driven, right? So the fact that I saw the spy setting up for a gap fade, and we had UnH, which has a ton of overhead traffic, put us in a good spot to watch this for a gap fade, so that’s what we had in it on watch for.

Coming into the open, I really wasn’t looking at this as my top priority or top stock to watch just because we had support in the form of some moving averages below and VWAP, we had a little bit of work to do before we actually started to open up. However, when the market opened, I saw that we had some selling right out of the gates and the volume was really good on the sells, so that drew my attention to it right away. So I switched to the fast timeframe on this and I saw some action, almost instantly, that I was liking quite a bit. And what that was, was simply this first few seconds of trading where we had this quick sell, we below VWAP, we were testing and rejecting and then we resolved, right here.

So right when I saw this happen, I was locked in on this doc, I wanted to watch this very closely because we had big potential to fill the gap, which was all the way back here at 231. So knowing that we had a big pocket to fill, a gap fade trade, I wanted to watch this because we were getting the right price action right out at the open. And what happened was, as we started to resolve lower here, I typically … this is a place where I would short. However, we had the 20 moving average in the way, the five minute 20, and that’s a moving average that a lot of stocks will react to.

And a stock like UnH, this is not one that I would be wanting to be short in the support and get kind of a whipsaw bounce because this thing can move in quite a wide range, as you can see in these candles. And these are only 24 second candles, you can see this candle right here move from 237 all the way down to just above 235, so almost a 2 point whip in just one 24 second candle. So I wanted to wait till we cleared that 20 day and then once we did, I saw the retest. As soon as I saw that retest starting to fail and we started to pull, I hit my short buttons and I got filled at 23540s, all right, 23540s for 2000 and I wanted to see if we could just fade right away and we faded instantly. So cut half out at 234 and then I rode the balance all the way down through 233 and then I took my final piece off as we crashed through 232.

So obviously this thing went quite a bit more and, yes, I did leave some on the table. However, with the current market conditions that we’ve seen in the last few weeks, just a lot of whipsaw and virtually zero continuation, I was being quick on my exits. And it’s something you have to do, is adjust to the market when you’re not seeing the follow through and the momentum, you have to adjust and I did that today. I was able to get pretty solid win out of this in just the first about 10 or 15 minutes of trading. And being that we’ve come off of just really lackluster action the last several weeks, you have to take that into consideration and I did and I took it off the table.

And yes, was it early a little bit today? Yeah, it was, definitely. But now that I’ve seen some momentum come into a stock or two here, if we start to see this across several stocks on a consistent basis over the next couple days, then we might be able to make the assumption that, okay, the momentum is starting to slowly return and we can now adjust back to how we typically trade, right? And that would be more aggressive, bigger sizes, looking for bigger moves and holding for longer. But since we’ve had, again, virtually zero continuation, I throttle back on my sizes and I’m quicker on my ass. It’s just adjustments you have to make as market goes through cycles.

So it’s really important to acknowledge that because if you don’t and you still remain aggressive during the times when the market is slow, you will grind through your account. So it’s important to recognize these times in the market and adjust to them. But in any event, you can see, really nice trade here on UnH. Nice way to start the week, the morning and we’ll take it. Good momentum trade guys, and we’ll get back here first thing tomorrow morning with another trade.

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.