Hi folks,
We were given another volatile week in the market. What made last week particularly interesting was the closing strength on Friday. The late day push we seen into the close ended up closing $QQQ up approximately 0.1% for the week, turning all of last weeks up and down movement into a non event when it was all said and done. $QQQ is now down -11.5% YTD!
The Art of Trading short term portfolio (which we have been reviewing at the end of each week) Is now +8.57% YTD! We will take a look at this market action plus the $BZ, $PTON and $CF trades we placed this week!
The "SHORT TERM TRADES" portfolio is basically this:
The trade alerts will be labeled "SHORT TERM TRADES". These will be trades that last a few days in duration, and we will be booking profits and losses much more actively. Holding no more than 4 active positions at a time. We will look to capitalize on long positions and potential short positions when the occasions are right.
Now onto the trade reviews!
$QQQ a Week in Review
Highlights from this week’s market movement
We were given another volatile week in the market. What made last week particularly interesting was the closing strength on Friday. The late day push we seen into the close ended up closing $QQQ up approximately 0.1% for the week, turning all of last weeks up and down movement into a non event when it was all said and done. $QQQ is now down -11.5% YTD!
Volatility picked up last week and flushed the market to fresh lows. This flush seen a retest of February 2021 highs (Previous resistance becomes potential support!) We had the fed meeting on Wednesday where the market pushed above recent resistance but QUICKLY fell straight back into support. Surprisingly enough we didn’t make a new low. A gap up open was then sold on Thursday and closed the market down into the previous area of support once again! Brutal whipsaw action! Friday retested support, fell below it then quickly recovered and rallied for the most part of the day. Some shakeout action occurred into 2PM EST ALGO hour but then a strong reversal took place closing the market into the high of the day!
I would suspect a gap up open to start Monday morning off but I think staying sidelined and seeing how this open reacts might be the best course of action, for now!
$NAMO: If you zoom in really close you can see $NAMO made a higher low. This could signal a short-term bounce or a nice recovery in the market from here! We will continue to monitor this chart, this coming week!
Looking back on the $NAMO chart in previous instances of similar action the market went on to rally higher. The action that the market provides us the week should give us a strong indication of what to expect next – in the short term!
$BZ Trade Review – Short Side Trade
From 1/21/22 - 1/24/22 – Position Closed
And 1/27/22 - 1/28/22 – Position Closed
Late day Friday (Jan 21) we went short $BZ. This stock was on my radar because it had recently lost a support on the daily timeframe. The stock had bounced from a recent low and RETESTED this support area. Bearish stocks love to retest support areas before failing again. Support turns into resistance! This is what I was looking for in order to trigger this trade short!
As soon as it became clear that support had turned into resistance I wanted to be in this trade on the short side.
We initiated this trade late day Friday.
The idea was to play on late day weakness since that was the trend each day this week!
Monday January 24th $BZ opened red but started to reverse out of the open. To avoid a possible R2G scenario we covered the short side trade and booked a +2.1%~ gain. With volatility heighted it is always best to consider booking gains quickly. Easy come, easy go!
On Thursday January 27th we basically made this exact same trade all over again based on the same idea. We initiated it on Thursday weakness and covered it once again on a gap down open for another quick +2.5% gain!
We will look for further potential weakness in this one again in the coming days / weeks! This trade has been decent to us so far!
$PTON Trade Review – Short Side Trade
1/26/22 into 1/28/22 – Position Closed
We took $PTON short on January 26th. This stock recently put in a bearish Power Earnings Gap. This is basically the opposite of a Power Earnings Gap. You look for bearish type setups like bearish flags, pennants, and potential loss of support with names like these! We did just that!
In this case $PTON setup a bearish pennant type formation and we went short when the setup broke to the downside!
As the setup developed further, I was watching close for our next move! Remember with the short-term trading setups you must be quick and nimble! The plan was to cover at least half of the position on January 27th if it broke below the $23 area!
I tweeted a chart to the Art of Trading private feed explaining my next plan of action!
We didn’t quite get into that area of interest that day so we didn’t take any further action with the trade at that time!
Fridays weak open in the market is what we needed to propel $PTON to the downside. This quick flush allowed us to bank a 10%+ gain in short order!
I alerted the feed when $PTON hit $23 and we covered the short position for a very nice short-term gain! It was critical that we planned well in advanced for these quick moves. Downside moves can be quick in nature so it is always best to have a solid “next step” in place when you’re faced with this type of action in the stock!
$CF Trade Review – Long Side Trade
From 1/27/22 Position Open
We went long $CF on January 27th. This stock and sector had been showing very strong relative strength against the recent weakness in the market! If strong stocks are strong in a weak market, generally they tend to be even stronger in a strong market.
Recently $CF made a nice bullish flag pattern that broke out above its 20D EMA. The 20D EMA has been trending up in a very bullish manner since early October 2021. The idea behind this trade is to play upon its recent strength for a potentially larger move to the upside. On Thursday $CF made an inside day candle which I tweeted about here:
Shortly after that tweet I decided this was probably a decent long side trade so I decided to alert this setup long!
We initiated this trade long at $69.45. With a $66 stop loss.
Short-term targets to the upside measured $75 to $80. We still currently hold this trade long into next week! We will see how it plays out!
That’s it for this week’s trade review!
Cheers and Happy Trading!
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