A Step by Step Trade Review: $PLTR!

Hi Folks,

I just wanted to give an update and write an in depth technical step by step trade review on a recent trade Art of Trading members took, $PLTR!

Swing trading almost anything in this market from a long side or short side strategy has been a little tricky with the recent volatility, headlines and endless tariff news. Patience, selectivity, and the ability to be nimble with both entries and exits have been key disciplines to execute a successful trade! The $PLTR trade that Art of Trading members recently made fits into this category, so lets spend some time reviewing that very trade and how we did it, today!

How did the $PLTR trade set up? What were the technical attributes that made this trade stand out?

The current market volatility wasn't doing $PLTR any favors out of the recent Power Earnings Gap but during that pullback phase $PLTR did make some relative strength moves on the days where the market was able to find some footing. This was part of the reason I continued to keep a close eye on the name because from a technical point of view the stock continued to show short term technical strength when it counted and most importantly, when it needed to.

$PLTR built a long drawn out technical wedging pattern from the February 18th high all the way into the April 7th low where it made a near 20% gain in a single trading day. More importantly it was even able to hold onto those gains on April 8th where as the market gave most of its progress back.

April 9th US administration announced a 90 day pause of Tariffs sending the market fiercely higher. $PLTR actually broke out of the long standing 2 month long wedging pattern that day.

This was a bullish development but as a trader you simply can't just chase a move like this. Although tempting it can often lead to poor entries and oversized losses. I treated this day like a Power Earnings Gap. I wanted to gauge market action in the coming days before just blindly buying another headline. I received countless emails from AoT members that day about the wild intra-day action.

Here are those thoughts that I shared with AoT private members:

In the next couple of days $PLTR began to consolidate with much narrower and tighter intra-day ranges. Allowing the the trade to setup and keep our risk in check.

This is what that looked like:

What is an "Inside Day" candle?

Inside Days occur when the current days range trades inside the previous days range. Inside Days are commonly seen during consolidation and contraction periods. The pattern is neither bearish or bullish, but it can be a sign for big price moves to come.

Narrow range price action helps set the chart up for a trade. As price narrows and consolidates, the move that proceeds after often defines the next trend.

Taking into consideration the relative strength moves, the tariff pressure (temporarily) relieved from the market and the ability of $PLTR to create two narrow ranged inside day candles while the market around it remained much more volatile. These technical attributes and observations set the trade up!

On April 11th AoT went long $PLTR at $88.10. Stop at $82. Target $100.

This trade was taken on a Friday so not much happened that day into the close. It closed with its second consecutive narrow ranged inside day candle in a row that afternoon.

On April 14th $PLTR traded higher in the premarket session on a positive news headline.

Although unexpected, this allowed for half of the position to be sold at the open to reduce some risk in the volatile, headline driven market and at the same time book a quick +10%~ partial profit on the short term trade!

I shared my intentions with Art of Trading members before the market opened that day!

Shortly after the open I alerted AoT members of the half sized sell into the opening range!

Reducing risk and booking half or partial profits is good trading practice for swing trading strategies, especially in unpredictable, volatile and headline driven markets. Sometimes its best that you take what you can get!

The very next day $PLTR continued to show resilience and strength with another relative strength move against major market indices. Taking into consideration that markets looked weak on the day I took the opportunity to book the remaining of the $PLTR position into the prior $98 resistance. This was just shy of our $100 which was fantastic considering market behavior and that the trade was taken just 2 trading days prior!

This trade was good for +10.42% in 2 trading days. The half size sells allowed for risk management and profit taking on the way up.

The Art of Trading Short Term Swing Trading portfolio uses a $100k model portfolio with a $25k position size. This is what that trade looked like there:

In stronger, less volatile market environments this is the type of swing trades that you can allow to run for days to weeks. With heightened volatility and uncertainty this isn't the case though. Its important that you learn and adapt into new market environments quickly. I think this trade review and the technicals behind it are a perfect example of just that!

Cheers and happy trading!