06/08 AXON lower highs

I started my day trading career with Tim Sykes and when I wanted  to learn more, I joined Investors Underground. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  Software that has helped me in my early years was: Trade Ideas software. Now I use FINVIZ ELITE.


 

Pre-market watchlist: AXON, TRXC, OPHT, SESN, GALT, GERN, VKTX, NOG and TXMD all short biased.

Pre-market activity was slim. Not much had volume. These days I rarely add any new tickers to my watch list, from the morning movers. Sometimes, when a stock is too good not to trade, I’ll add a ticker to my list. But mostly I focus on the tickers that are already on my list. The watch list consist of  tickers in total with almost all having an average volume of approximately 1 million. I focus on these, because I have already made a plan for these stocks and I have a general idea of that they could do. Trading is not an exact science, so my perspective has kind of a general idea of what might happen.

How I use support and resistance

S-R AXON example - 1H - 20180608

AXON, one hour chart.

$6.60 is the most important level on this chart, because when this level breaks out, an imminent squeeze will occur.

But how do I look at this trade? I know that, yesterday, $5.90 / $6.00 failed after that breakout to $6.60. $5.90 is the high, which was tested a few times before a decent drop to $4.60 yesterday. I also keep in mind that $5.00 is an important whole number. These are make or break levels of support (in this case). When this fails, mostly stocks will fail more and wash out. I also know that $4.60 was the support from yesterday after the big afternoon fade. I started to build my positions when that $5.00 /  VWAP level failed and added when the 50 EMA on the one minute chart held resistance. After this it was smooth fading towards 4.80 and covered my position in that 4.75 to 4.60 fade. IMO, this stock is interesting for “investors” is that it is a growth company. With a working capital of a whopping USD 125 million, I doubt they will need cash anytime soon. Also, this ticker does not have a history of dilution like TOPS and DRYS do, so it is a saver investment. You need to keep this in mind, because this will influence other traders too. You need to know or anticipate what will cause this stock to squeeze.

What I liked about this pattern on AXON was that there were easy to spot lower highs, after that big drop from 5.22 (all the way to 4.33). Lower highs are key when you are short in a trade or want to short a ticker, because lower highs confirm a pattern.

This is not my favorite pattern at the moment

For some reason, stocks are contra trending right now. I notice that most stocks on my list are strong compared to the SPY (my main EFT I stalk to review the markets/macro’s), when the SPY is down and visa versa when the SPY is up.

My favorite pattern, right now, is the overextended chart. My trading has changed so much. Where the plays were impatient before, now the plays are patient. What has changed is that patterns need to develop more. Nathan Michaud of Investors Underground says this all the time: It is more a trend following market right now. This means, inherently, that you need to be more patient and wait for a setup/chart/price action to develop. Buying anything that spikes, does not work for me. This is because support and resistance are important for my strategy to work.

IT IS TIME TO LET GO

One thing that helped was to let go of fear of missing out. FOMO, or FEAR OF MISSING OUT, is the main driver for traders that short anything that spikes more then 7%. This is not how trading works. Trading works when you understand a ticker. Understanding a tickers, means that you have read the chart, know its history, have read the filings and most certainly have reviewed the support and resistance levels. DO THIS! It is do important!

FINANCIAL / FUNDAMENTAL ANALYSIS

As an accountant, it is easy for me to read Financial Statements. Numbers is what I live for. I do believe that you need to, occasionally, read financial statements to understand the risks involved.

As example: low cash = offering.

Year on Year growth means potential squeeze at resistance levels (when short).

Negative equity (-/- Book Value Per Share) could mean bankruptcy / chapter 11. You’d think Chapter 11 would be great for shorting, however, the latter is true.

Trading is also counter action. Because too many traders will follow a trend. As an individual (retail) trader, you are always trading after the facts. Trust me, Institutional Investors have the upper hand, because they will always, willfully or unlawfully, have more information than you. These fuckers will already have left the scene, way before you realize you are knees deep in shit and holding the knife.

Conclusion

Okay, this post is a bit of everything. Kindly note I am new to blogging and I am not a writer. My main goal here was to show you my thinking process. Having a complete picture helps with trading. Understanding the bigger picture is equally as important. Trading has changed my life and I hope that my blog will help you too. Know however, that I did have help along the way.

Tim Sykes helped me choose which stocks I want to play. Investors Underground has taught me how to play them. Tim Gritanni/trading tickers taught me how to trade Nasdaqs and Tandem Trader has taught me when to enter a trade. USE THESE SERVICES TO YOUR ADVANTAGE!

These services look expensive, but USD 2,000 investments are nothing if you can make USD 50,000 per year, that USD 2,000 is nothing. Last year I made little over USD 26,000 dollars. Yes, I don’t make money like the big boys. However, I do know that if I keep this up, I’ll be in the five figure club in no time. Money makes money. It is that simple.

I take my time, okay? And so should you! Learn, study, practice and plan. That is all. This takes time. But with time, you will get there. Even with a stupid $500 account. If you are patient, even such a stupid amount can make you a millionaire. It will take time. Maybe even 10 years. But with these strategies that  Tim Sykes and Investors Underground offer, you will be able to get there. Just trade carefully and cut your losses quickly. You can always try again!

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close