Hey, what’s up guys? It’s Wednesday morning here and we are finishing out at just over $2,300 in profits on two trades right out of the open. We had a very busy morning of action, lots of stocks moving on both news and earnings and quite a bit to choose from, but we’re done in the first hour of the day and that’s great news because it is the first day of lobster mini-season here in south Florida and I’m headed out in the boat to see what we can get together for dinner. So let’s take a few minutes before I head out and do the recap for this is morning’s action.
Alright, good afternoon guys. Time for a recap of this morning’s action, which was quite busy in the pre-markets. It had a lot of stuff really going on, a lot earnings, a lot of news, a whole handful of stocks moving all over the place that had potential to move, but unfortunately it was a little bit of a let down the type of action we saw once the bell rang. We really didn’t have much directional momentum that really aligned with the setups that were being presented and, you know, in alignment with the market it was, it was kind of a disconnect all over the place. There were some decent moves that there was some profit potential and we were able to catch some of that. We weren’t able to get a huge continuation move, but nonetheless still locked up a relatively decent day here. Just up about 2,400 here, 1,400 on Cat and just shy of a thousand on TXM.
So let’s, let’s talk a little bit about the trades. Caterpillar, this one we liked because it was starting to clear down through all its major moving averages. This is your 20-day, your 100-day, your 200-day and your 50-day. So if we were starting to clear through all those moving averages, that is something I wanted to watch because below that we really didn’t have much in the line of support until you got down here at about 125. All right, so if you look at the daily, what you’ll see here is that once you clear through all your major moving averages, there’s really not much in the line of support until you get down towards this 125 level, right? There’s a nice pivot in through here that was established. So good room to move and being that it was an earnings play and if it did start to break down through its major moving averages, we could potentially see a really nice move.
So how did I trade this? Well, if you look at the fast time frame, what happened on the open was really picture perfect. I didn’t take the trade there because we had a little bit too much support in the way, but this is a good example of really what you want to look for on the opening range moves. And what you see here is the back test of the 200-day and fail. All right, we get the pullback. Here is the relief move and it’s a lower high, that’s really important because that’s basically confirming the weakness of the stock. So this lower high that it makes after its initial move, that’s now telling you the stock is weak. This is where I typically would short the stock. However, we had too much support in the line of the 50-day here.
I didn’t want to short into support and get whipsawed back against me and kind of get caught in this channel between the 50 and the 100, so what I typically do is I wait until the support breaks. That’s where I’ll take the trade because that’s the most predictable and that’s where it’s the lowest risk. Shorting into support is high risk going long into resistance is high risk, right? But for example purposes, this is what I, this is the setup, this is the price action I look forward to initiate a trade. All I want to see is a pivot be put in in the direction I’m looking to trade, which in this case was to the downside on Cat and we had a lower pivot high put in that confirms the weakness of the stock. Now we just got to find the right entry and the right entry here was just below the 50-day moving average.
So what happened was is as we broke below this and we started to slightly back test that 50-day and we started to pull away from it, I got short. Now I did get short a little lower than I liked. I got filled 12940s and 30s, it should have been closer to 12970s, but with all the action that was going on this morning, I had my eyes on a handful of stocks. I got a little bit of a later fill, but that’s okay. We were able to get this trade and we got filled 12930s I took some off 12890s and I took more off at 12860s. And then once we started to bounce off the bottom here and we put in this higher low, this higher pivot low, so right here you can see that you had a little bit of a pullback and it held, so it held a higher low.
That’s telling me that the shift in the trend or shift in momentum has now taken place. What should have happened here is it should have rolled back over, but since it held a higher low, that’s my exit signal. So I was able to lock up 1,400 on that. Definitely a decent trade, a very quick trade. So we’ll take that. One thing to note here on this as well, which is really important that I liked is the volume spike and the volume ramp as we started to sell, right? You can see it’s kind of a big volume spike here on the open, kind of goes flat, right? It kind of goes flat, you know, for the next couple minutes. But then look what happens once we hit that 50-day, we get the spike as we hit, and then as we start to sell, we get a ramp in volume.
So a ramp in volume as you’re making the move, that’s typically telling you that the move is legitimate. Right? It’s a real move. And so that’s, I was really glad to see that. I was hoping we’d get to continuation, but the markets turning around and pushing higher is what ultimately just killed this trade. But that’s okay. We positioned ourself properly. That’s the important part because if this would have continued, it would have been a huge trade like last week’s on CSX. So the important part is always position yourself properly, making sure everything aligns. That’s exactly what happened on this. Couldn’t have really been any better of a setup. It’s just that the market alignment didn’t stick into the open, but again, so it will lock up a decent one on it.
And then we moved on to TXM. It’s a rare day that I take two trades in a day, but this stock did set up pretty nicely as well. So what I liked about this was nice gap higher here. Daily chart was pretty interesting in the fact that we had a move through the highs and move through some ascending resistance. A lot of stuff going on here that looked good. You can see this ascending resistance line. We’re clearing through all resistance, right? So we have room to run. That’s really important. And what I liked on this was just this recent sort of set up here where we’re up-trending, it’s a strong stock, it doesn’t really take too much of a beat down. It’s strong, so it has potential to really move. It’s a big breakout set up. These are the types of long trades that I really like to take. All right, so looking at the intraday chart here, what happened on the open, you know, really wasn’t too impressive.
But once we turned around and we took out the high here, this is where I started to look to get long. Now the pre-market high, you know, something I pay a lot of attention to. So if we look at the fast timeframe here, I’ll show you where I took the trade. But what I did on this is once we broke the pre-market high and we held above it and put in the pivot, I got long. So this is such a good example of how to wait and look for the back test of the level. Cause anytime a stock breaks out through major levels or breaks through a support or resistance point, if it’s going to really put in a move, it definitely will back test that level and confirm it. Just like you see here, this is the pre-market high. So look how good of a reaction this has.
Here’s the move up, taps it to the penny, pulls off of it. It’s not ready yet. Here it pushes up through the high, right? It’s starting to look better. You come back, test, test, test, test, push, starts to move. I got long, I got long a 129s and we started to make a decent move higher here, a little bit of a pullback, held 129, started to move up again. I sold half the position at 12960 is where I got filled. I got a really good fill on that, almost the high a day, but I took half off there, had 2000 shares on this, so I took half off there and then when we kind of double topped here, I said you know what? I’m going to throw a break-even stop at my average, which was right about 129 and we had this hard pull, just took me out right away so I was able to lock up a decent amount on that.
So not, not too bad of a day. I’ll definitely, you know, take what we got and move on into tomorrow. So anyway guys, that was TXM and the Caterpillar trade. We had IRBT on watch. The only thing with IRBT is the price action was kind of tough. It was kind of tough to deal with here. So I like the setup, the setup is really good, right? We had this really major support coming into play here with this trend line, the pivots and we started to break down through that. But it was on a circuit breaker, it was down quite a bit. And those trades are typically not as predictable because it’s gonna want to have a relief move and you had an early move on it, it was kind of quick. The price action was tough. The spread was all over the place.
You had to get filled on an up-tick, which means that you had to be willing to basically short into a move against you right as it’s coming back up. And the type of price action on this was not really what I like to see. Also what I didn’t like on this was the volume just completely dying into the move. Right? So it was completely dying into this move. That’s not a good sign, right? I want to see the volume ramping into the move because that’s telling me that the move is legitimate. We’ll probably see further continuation, but what happened here is that big volume on the open, but it just a complete die out of the trading volume into the, you know, first 10 or 15 minutes of the day when, if it’s going to get a momentum move, the volume should be increasing into that move.
So couple of things I just didn’t like on that and I’m glad I didn’t trade it. You know, it made an okay move if you look at the faster timeframe. Definitely some profit potential on it if you were quick about it, you know, as it moved through our level here at 7127, definitely a decent move. But again, it just was not one that I really liked what I saw. So I took a backseat on this one and traded Cat and TXM. So anyway, guys, that is the action for today and we’ll be back at it first thing tomorrow morning.
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