Warrior Trading Blog

Weekly Wrap Up! | Mike’s Trade Recap

Hey what’s up guys? So, wrapping up the first week of August here and wow. It has been nothing short of frustrating. You guys have also probably noticed the choppy, inconsistent action that we’ve been seeing.

 

A real lack of momentum across the broad, which as day traders it makes it extremely difficult for us to pull any sort of significant profits out of the market.

So, yes, I am definitely ending the week here slightly red, but the important thing is, is that I’m able to contain the risk. Containing the risk during these choppy times is extremely important because when the action does pick back up again you definitely don’t want to be spending that time digging yourself out of the hole that you created by trying to grind through trades that the action just isn’t there.

So, important thing here is to make sure you’re able to contain your risk during these times where the market doesn’t really have much action going on. So, I want to take a few minutes here, talk a little bit about the trades that I took and just break down the action from the week in today’s recap.

All right guys, so let’s jump in here and talk a little bit about the action from the week. Some of the trades that I took and just the action in general. So, Monday actually started out really well. We had a really good trade on Twitter. A very straightforward momentum based trade on a macro support break. Looking at the daily chart you can see that there’s a very well established ascending support line here with very precise interactions all the way up until we broke it and closed below it just last Friday.

So, what I like about this line again is that it’s a very obvious line. The levels are very precise. We interact to the penny each time, and we broke it. So, we broke a longer term well established trend and when that happens, we typically see the action accelerate to that side. So, being that we closed below it on Friday I wanted to check it again Monday morning to see where we were in relation to that line in the pre-market, and sure enough we were sitting just below it all the way through pre-market until the open.

So, I wanted to see what would happen on the open to see if that selling would accelerate, and sure enough as that bell rang, that volume came pouring in and this Twitter really started to sell off. Now, we had room down towards $32.25 and I said alright, I’m going to get in this thing. If we can close down back below the VWAP here and I got short at $33.60. All right? $33.60 I got short, and we got it. All right? We got the continuation in the momentum that we were looking for that we usually see in these types of plays when the action is more consistent and it sold off right away for us. We covered our position down through this move here into that pivot at $32.30 was my last cover. Then the trade did continue for the better part of the day here into the afternoon, so you could’ve easily caught the VWAP retest and fail or the retest of the pivot from the underside and still got a very nice trade.

Now, I didn’t continue with the trade because my plan was to cover the position at this pivot and typically when my plan plays out I am done trading for the day. Doesn’t mean there’s no more trades to be had, it just means that my plan played out and I typically try to stay to plan as much as possible. So, Twitter was really great action. Great volume. Great technical breakdown. Great momentum. Just all around a great trade and it’s reflective of the action that we normally see in a much more consistent market, but again summertime here tends to be a little bit tougher to trade, a little bit more choppy altogether. But we were able to pull a nice win on Twitter so that started off the week really nice.

Then we moved into Tuesday. All right? We had Shop on the watch list on Tuesday. There was a decent look on this thing if it started to break down below this support level here that it was sitting at right around $136.60. So, if you look at this level $136.60 you’ve got a very well defined complex trend line here, moves its way through, right, moves its way through here. Bunch of interactions on the way up. You get back above the trend line. You sell down back through. Okay? This is important.

When you sell back through that trend line, look at the volume that you get. Okay? Volume through the trigger means that’s a valid point of support of resistance. All right? We retest it again, look at the volume as you come into that level. Right? It’s a big retest, not nearly as big as this volume over here but relatively speaking it is more volume that you see in days past, that’s because you’re testing a resistance level.

Same thing in through over here. You’re definitely testing it to rejecting that level. Then that line came into this $136 level where it correlated with this $136.60 pivot. So, I like this because it was breaking this complex line. It was breaking this pivot. There was a straight shot down to roughly the 200 day moving average, which on Tuesday was around $129. So, we had about six or seven points. It doesn’t look like much room here but when you dial into the five minute it definitely had some room to fade. I was liking that if it started to break down out of the open to get short, it’d capture a quick four or five points down to that 200 day and that other trend line that came into play.

Now, what happened was is Shop opened and the volume was anemic. Right? There was nothing. It was veery light. There was just nothing there worthwhile to try to size up into a position because this stock can really whip around and it makes it really tough to size into a position. So, I actually didn’t even trade this. I sat tight and didn’t trade the entire day, just because the action was choppy. You can see this thing just kind of chopped around. It really didn’t do too much. That’s typical of this action that we’re seeing during the summer months. You know, it’s okay to sit tight definitely and you don’t want to get whipsawed out on these names and that’s what I was talking about of containing the risk.

If you can contain the risk you’ll be much better off when the action does return. So, yeah, this whipsawed around a couple points in each direction but not really tradable. Just not really tradable to get a momentum trade. All right? So, that was Shop. I stayed away from that one. Pretty much as soon as the market opened I could see the price action was no good, so I said all right guys, we’re just going to sit tight on this one. Not going to touch it. We switched our focus to LL, which actually had a decent set up coming into the open. But again, just chopped out. Price action was no good. Didn’t hold the level so we called it a day and said all right, we’re not going to trade ’cause these two trades are not playing out.

So, if you look on LL here below $19.40 you had a nice pivot at $19.40, which was right here. This recent pivot low. It opened up down towards $17.30. So, it had some news out on it and we were looking for this thing to fade this pocket all the way down to $17.30. It actually had a decent look coming into the open of the market. If you look at it from the pre-market, this is the type of set up that we look for. This pre-market drift. All right? We got this pre-market drift, we were below the VWAP, below the 20 and we were right below the pivot coming into the open. Typically what we see on these is that the action is barish enough, the momentum is there, we’ll see them open up and sell through the pocket. That’s where we can take a trade, but since it’s choppy, inconsistent action right now you can see the stocks just chop around. They’re whipsawing around. It’s making it really difficult to get a proper entry and continuation.

So, we didn’t trade that ’cause the price action was no good. You could see it in the level too, see it in the time and sales and I just decided to say you know what, it’s not worth trading this stuff. We’re going to sit tight and wait for something better. All right? So, that was Tuesday. No trades.

Wednesday we had Apple, which started to look like it was going to play out for us and we stopped. All right? So, Apple gap up on earnings. Started to reject. This had a major ascending resistance line here. You can see, started back here in May of ’17. Nice line up through here and in the pre-market of Wednesday you could see it rejected it quite nicely twice. All right? So, if you look at this it started to come up here just short of the line, pulled back hard. Up again, tested it, pulled back hard right to the open. Hard sell on the open and we had this ascending support line in the pre-market as well as this pivot. I said I’m not interested in getting short in this thing until at least it breaks through this first ascending support, potentially down here depending what the action looks like. But it at least has to break down through the VWAP and 20 and through this ascending support.

So, what happened was is as the market opened, we sold off pretty quickly. Profit taking most likely here what happened, we got bought back up, tested the VWAP and 20, we sold again. Now, I started to like this ’cause we were making lower highs. We sold below the VWAP and the 20. We closed below this ascending support trend line, so I sat tight for a few minutes and I was watching the price action here. We kept retesting this ascending support trend line and we started to pull away from it and I got short at $198.10.

Now, we just kind of hovered around $198. We weren’t really doing much and when that happens you’re not getting that continuation, you need to be on high alert. So, I said I was going to keep a very tight stop on this. It either goes or it doesn’t, starts to break down or I’m out. Sure enough it held that $198, got bought right back up. I stopped at $198.30. A very, very tight stop for me. Only $0.20, which is very, very tight. Usually my stops are outside of $0.50, but this was one of those trades that it either goes or it doesn’t. We’re looking for the momentum and it just didn’t work.

So, I’m okay with the trade. It’s just one of those ones that didn’t work. The best thing to do is to go back and ask yourself would you have taken that trade again? If the answer is no, then you need to figure out what happened or why’d you take it. If the answer is yes, then you’re probably just … Took a trade that didn’t work. Right? Not all trades work. This one didn’t work. I liked the fact that it broke down, confirmed it was weak here out at the open, broke the ascending support, tested the ascending support and the spy was initially in this direction. Started to look a little bit weak, so we had some alignment there and I tried to take advantage of that and it just didn’t work.

All right? So, the next one I switched to we had on the watch, this was Baidu. Baidu had a really interesting look here with this trend line and I’ll show you what we were looking at. If you look at the daily chart, very nice ascending support line here. All right? Ascending support on the way up. Nice interaction here, here, and starting down here. We were breaking it on Wednesday and what I liked about it is that if we could get below it coming into the open we had a nice pocket down here near $213, $213.50.

Unfortunately out at the open it opened above and when it opens above like this, I don’t touch it until it comes back below or it starts to at least get back below the VWAP and the 20. Now, we didn’t trade this in the morning ’cause I was dealing with Apple. I was just watching it on the monitor and we started to fail this $236.50 level so I said all right, if we can sell below VWAP here I’m going to try it ’cause it failed the pop and let’s see if we can get it to break down to pocket.

Now, I got short right here at $233.50 as we were breaking down through VWAP. I was looking for the continuation back towards the lows. Now, what happened was I was being a little bit more conservative than usual because I stopped on Apple. Typically when the first trade is stopped I’m a little bit more conservative but I will take another stab at something else if it sets up. Baidu looked like it was going to set up here quite nicely. It came back to retest, the VWAP and the 20. Looked good. Retest, retest. Started to look like it was going to fail again, and all of a sudden we got this quick pop. I stopped. I stopped for a point at $234.50.

Now, the unfortunate part of it is, as soon as I stopped it turned around and sold off and did exactly what I wanted it to do and sold off for three or four points here to the downside. Would’ve been a quick, easy trade. Would’ve been a nice day. Instead I got chopped out on that. So, Wednesday was a day where I got chopped out, I got stopped twice. Again, the losses weren’t big it’s just trying to navigate this choppy action. You have to take stabs at stuff when the set ups are there or else you’ll never realize the win. Would I have taken this trade again? This one’s a little bit more questionable because I probably should’ve waited til it got back below the trend line but I was trying to anticipate the break down here and seeing if we could get this selling to start. I was just a little bit early on the entry.

So, Wednesday, again, kind of choppy., whipsaw action. Really not much there and got chopped out and stopped twice. Now, Thursday, yesterday there was some decent action going on obviously with Apple and Tesla. All right? We had Tesla on watch, I’ll talk a little bit about that one. Tesla on watch above the EPS high, which was over here. The earnings release high, which was around $335.75. Now, the issue with this one was it chopped out sideways for the whole morning and then literally at 12:00, lunch hour, is when the moves started to happen. I don’t trade during lunch hour so I don’t consider this a miss for me, ’cause it’s not within my plan but you can see, once it got up above that earnings per share high, the release high, it really started to run. So, $335 up to $344, quick 10 points or so and then continuing up towards $350 to end the day. Nice momentum there, it just didn’t happen during the normal times we see momentum.

Normally we see all the momentum in the first hour or hour and a half and then it goes choppy, flat, sideways for lunch time. We saw the exact opposite here on Tesla, which again, not really expecting it, which again, makes it difficult for navigating the market. All right? So, that was Tesla. Apple just straight moonshot here yesterday. I just didn’t trade this thing. I just wanted to sit tight with the action I’d been seeing. I just wasn’t feeling like trading that much, especially [inaudible 00:14:50] choppy price action. You know, Apple made a really nice move. I’m glad for all those guys in our room that were able to take advantage of it. Nice continuation play here to the upside but just wasn’t for me. I wanted to sit tight and wait for a different type of trade.

You know, I ended up looking at MGM. MGM had a really nice set up here coming into the open but we didn’t get the move that we wanted. Again, choppy sideways price action on the names here in the first hour or so. Looking at the daily on MGM, really, really nice well defined pocket. All right? Look at $27 right here. Huge pivot in through this level. Dropped straight down to this very nice pivot in through $25 ish. Just about $25. Now, what I liked about this one was that MGM usually are very liquid stock. Good volume. Trades relatively well. If you were coming into the market open right here, drifting back below the VWAP and 20, back below the pivot. Started to retest and then as soon as the market opened it got bought up and I said you know what? Just going to sit here and not going to touch it. I don’t really want to get involved with the choppy sideways price action.

So, again, just action you gotta really be patient and navigate around. The action is definitely few and far between but there are trades out there, you just have to keep an eye on everything that’s going on and have a plan. All right? If you just kind of trade everything that moves and trading all throughout the day, you’re going to find yourself probably digging a hole. In the long term it doesn’t work. All right? So, you have to have a plan. My plan has always been trade the first hour, hour and a half. If nothing happens, you’re done because I know that in the long term, in the first hour, hour and a half, that’s where all the action is. That’s where the momentum is. That’s where the volume is. That’s where the money’s made. So, if you miss a day or two where the action happens like Tesla right at lunch time, you can’t beat yourself up over it because 90% of the time the action’s going to happen in this first hour and it’s going to go flat sideways for lunch time.

So, it’s part of the market. You can’t hit every trade but it’s important to have a plan to keep you from getting too far in the red during these times of inconsistency. So, that’s the week guys. That wraps it up. I’m ending slightly red but we’re back at it next week. We’ll look for another big trade or two like we had on Amazon last Friday and put us right back in the driver’s seat. So, it’s okay. We’ll get back at it next week. Everyone have a great weekend.

Oh hey, I didn’t see you there. I was just working on the dream board for my next home run trade. Hopefully it comes soon. Until then, make sure you subscribe to get email alerts any time I go live or upload new videos. Until then, happy surfing.