Trading stocks reacting to news without reading it? Seems like a weird thing to do but let me explain.

Our bread and butter is trading momentum stocks, especially those that get hit with news. We took a trade today in SHOP that got rocked after some news hit the market. The actual content of the news isn’t as important as how the stock reacts to it. We look for a setup to form that gives us an opportunity to enter the stock.

News Surges Volume and Price Range

When you have a technical analysis pattern and you’re marrying it with fresh news, you’re likely going to get a surge in volume. This volume is going to give you a bigger push than what you would get on straight technicals alone. One of the things that I always look for is expanding volume, and in this case it was 6 million shares.

Shorting SHOP

As this news came out, SHOP spiked down to $110. I don’t like to chase these things down on the first candle. I always wait for it to pop or a technical pattern. As it hung out under its VWAP, I notice it developed a big ORB pattern. The ORB pattern stands for the opening range breakdown. SHOP developed a morning range and then violated the support level, signalling an imminent break. I anticipated the flush as it began curling down underneath the VWAP so I added into my position. Once the flush came I covered some at support and into the thrust.

Exit Target at Support

Remember, you don’t know how far down its going to go, but you need to have an idea in mind. I used the daily chart to see where the first levels of support could be. I also have my 50 SMA acting as support near the same area. I want to be covering into that spot since it’s a potential a bounce spot.

This is how you pick your targets. You look at stocks on multiple time frames and then use a little bit of common sense. When it’s starting to get a bit extended and close to support start taking your gains. I always like to leave a little for a home-run especially when you have a good setup with news. Remember to move your stop to your entry price to make sure you’re guaranteed a profit on the trade.

If you’re not sure of the setups and price patterns that we’re talking about you can learn them all in our Bulls Bootcamp. It’s an intensive 60 day course to teach you exactly how I trade and why. Our next bootcamp starts on October 12^th, 2017. To learn more or signup, email me at kunal@bullsonwallstreet.com today!

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SHOP

We get our ideas from the daily chart and SHOP had a few things working for it. SHOP was on my watchlist as an earnings breakout trade. The stock broke over the range and into $100 on news of strong earnings. I had a picture perfect entry on this stock. If SHOP was able to hold this level of support at $101.50, then I knew it had the potential to run. It had a history of making runs, it had a beautiful range that moves every day, sometimes $6 to $10, and I had a low risk entry.

As the stock was holding this first level and came out of range, I longed this stock 600 shares right at $102.00. The stock popped up to $103.70, at which point I sold off a few hundred shares. I was actually up $1200 but all of a sudden, the stock broke back underneath the VWAP. I knew this was weird since SHOP should have held above this level. When a stock breaks above the VWAP you want to see it run towards its high of day. It came back, broke underneath my buy price and broke under the 9 EMA.

I ended up selling this position near lows and took what was a huge gain and turned it into a loss. When you turn your winners into losers, it could really ruin your day making it hard to progress in trading.

The big lesson is to always aggressively manage your risk. We’re not just traders looking for entries. But more importantly once we’re in the trade, we must focus on how we manage the position. We have to keep rising up our stop losses. But the trade needs to at least be a break even trade. We should be selling it once the stock comes back to our buy price if we’re up that much. You don’t want to limit your downside. If you make a mistake like this every day, before you know it by the end of the year your seeing $100,000 difference in your total P&L from what you made and what you gave back.

If you’re not sure of the setups and price patterns that we’re talking about you can learn them all here at our Bulls Bootcamp. It’s an intensive 60 day course to teach you exactly how I trade and why. To learn more or signup, email me at kunal@bullsonwallstreet.com today!

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We recently had a market roll over which can provide many great shorting opportunities. A lot of people assume they can only go long. But when this type of dump happens, you can have bigger gains because the range expands. Remember, stocks take the stairs to go up and the elevator to come down.

SHOP

SHOP was breaking support the last couple of days. Yesterday it had a great bounce because it never broke its 9 EMA. So today when it started to roll over and break under its 50 SMA, that’s a sign that its re-breaking. We took multiple trades on this, with the thesis that on the bigger picture SHOP was ready to go. All we needed to do was align our intraday setups to really nail this thing down.

I traded 2 setups with SHOP that worked out well. In the morning you can see this huge push down so I waited for a bounce. When it remounts some support I waited to short it. As it popped into its 20 EMA, and remounted the VWAP I shorted it a few hundred shares. I shorted 300 at $87 and covered 100 every time it flushed.

When I’m trading well, I’ll typically hit a stock 4 to 5 times to elongate my gains. It’s not about going all in, but trading around a core position. So once it popped again. I shorted at the 9EMA but ended up covering it flat. When it started to go up, rather than getting frustrated, I got excited. I got out for a small loss but if it starts to pop, I’m going to be able to get more reward because I would be able to short it higher. A lot of people take a small loss and get frustrated. But if I have an overall thesis, I know that I’m going to end positive at the end of the trade.

Once it popped into the VWAP midday, I shorted it as it once again moved back under with a stop above the recent pivot high. Then it just broke down, allowing me to cover into the flush. A stock like SHOP has incredible range, so only shorting 300 shares can give you some massive gains.

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AAOI

On the daily chart, AAOI gapped right down to the 50 Simple Moving average. After a series of down days, we knew that the price opening up at support was just the setup it needed for a big range play. Once the bounce was confirmed we waited for a pattern to develop and at the open, the stock setup for an Opening Range Breakout. We bought into the stock at $59 and sold as it trended above $60. As the day progressed, AAOI developed a 1-2-3 flag buy at which point I re-added into my position. After the red to green move, the stock put in another flag pattern allowing for a great run to $63.

SHOP

Another great bounce play we were calling out was in SHOP. Now our chat room played this great bounce just three days before. Just because a stock paid off doesn’t mean the momentum’s fizzled out. We kept this on our radar and once the stock opened at $82.50, we were watching it for another potential bounce. After putting in a double bottom support we entered for a long at $82.29 once it broke its descending trendline. SHOP had the potential to reach a price target of the previous day’s lows at $84.50 so when it setup again we were ready. We reentered the flag break at $83 and again at $83.75 scaling out as it trended all the way to $85.50.

We had a great day trading these bounces and hope you can join us for the next round. If you’re not sure of the setups and price patterns that we’re talking about you can learn them all here at our Bulls Bootcamp. It’s an intensive 60 day course to teach you exactly how I trade and why. To learn more or signup, email me at kunal@bullsonwallstreet.com today!

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On June 12^th, we traded SHOP, making about $1600 playing off of a great setup. On Friday June 9^th the market had a huge down day, particularly in the technology sector. But by the following morning all stocks opened weak. We knew that if the market flushed down at the open, there’s a good chance for a market reversal. When the market broke below the previous day’s lows and it couldn’t hold, that was your fake breakdown. That’s when the market snaps back and when you want to be longing stocks, Tech stocks in particular.

So this morning I had a premarket list which included NVDA, SHOP, WB, and more. These stocks broke down on Friday but right up to support levels on the daily chart. If the market reversed I knew that there was a strong chance for a bounce if the market reversed.

SHOP’s Intraday Bounce

Today SHOP opened up at 90, which was pretty weak. In that early morning flush, it pierced the lower Bollinger band and tapped right into the previous support spot on the 50 SMA. This is the same level as previous price support at $81.00. With multiple levels of support, one of the things that I do is to converge multiple patterns and multiple layers of a stock. When you have pattern convergence, it can apply deeper meaning to those particular areas. When you start to converge a lot of support in one area along with the price pattern, now you’ve got yourself something awesome. That’s where you can really catch great bounces.

At the open, I did nothing and just let it spike down. I knew where my bounce level was and I patiently let it fall lower. Once it comes down here, I used a green candle to make sure its holding before longing this thing with a stop directly under. I had a 300 share position and sold a few hundred with each pop. With the rest of my core position, I just played the trend for the rest of the day. We caught a $7 bounce right at the open.

Remember to always be mindful of aligning on multiple time frames. Strive to see an idea in the big picture and then use your intraday chart to guide your entries and exits. But you must have an overall thesis on the trade.

If you’re not sure of the setups and price patterns that we’re talking about you can learn them all here at our Bulls Bootcamp. It’s an intensive 60 day course to teach you exactly how I trade and why. To learn more or signup, email me at kunal@bullsonwallstreet.com today!

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