10/26 – Paper cuts and fighting trend

I Started my day trading career with Tim Sykes, where I learned the basics of high risk day trading. When I wanted to learn more, I joined Investors Underground. They opened my eyes to new setups and gave me a wider scope of the markets. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  I use FINVIZ to scan for stocks for my daily watch list. Click on the highlighted links for more details. For my main page, please click here: Day trading for beginners


 

Introduction

This week was a week of fighting trend. The markets were down, but the tickers that did look nice went against my bias. The biggest miss I has this week was on TRXC. TRXC crapped well over 20% on some short sellers news saying the company is overpriced 9in short!) and I completely missed the move! My main focus was on GLUU this week, because I know this ticker. GLUU has a similar pattern as last year and with a 115M share float I was expecting a lot more downside and resistance. Volume was the main reason GLUU jumped this week and that cannot hold IMO. Also the spread is reasonable, thus making her a nice candidate. I will go into more detail below.

TRXC

This ticker has been on my watch list for so long and the 20% drop was also a move I was anticipating. The drop from its highs was not a surprise. The price action was kind of similar as that of the price action at the end on June. Smart Money has clearly taken their money and the other smart money (the big boi short sellers) placed a perfectly timed news/attack on TRXC. Right at the USD 4.00 area. This level was the level TRXC broke out off in June and was tested as support after that big move and tested USD 4.00 again in August.

All the short seller had to do was wait for USD 5.00 – USD 5.25 to fail and a sell-off would occur. Quite obviously short sellers started attacking that break of trend from the end of September / beginning of October. This is all hindsight, but it is also important to understand what happened. Short sellers attacked this ticker at exactly the right time and they drove TRXC through the 200SMA like it was nothing at all. My guess is that they will drive this ticker to a level of around USD 2.50 to match the trend from last February to April. This level was before the massive uptrend to USD 7.25. This move clearly signals that smart money has left this ticker and are looking to re-enter when the time is right.

This is just hindsight guessing, but it looks like smart money was using the whole “buy the rumor and sell the news” traders to set this ticker up. The sell-off started when the FDA issued the CE mark.

In conclusion, it is no wonder smart money are 1) shorting this and 2) setting her up to match the previous trend. That means that smart money will start accumulating shares again soon. History almost always repeats itself, so I wont be surprised if TRXC ramps back to new highs again next year. I am not saying I am bullish. Who am I kidding? I am a short seller. All you should understand is that smart money play games and that we retailers should be aware. Take advantage of that which is given too you. Don’t be biased on this ticker, because there are still a lot of people that believe in their tech.

For the short sellers out there, know that there are a lot of bag holders too. The risk is that volume will pick up again and retail traders will pick up pace too and have TRXC reclaim the 200SMA.

GLUU

The reason GLUU was on my radar is because this ticker has a similar pattern to TRXC. Exponential uptrend and significant resistance. Games are hot business right now, because developers can now utilize and monetize on games and further expand their business.

GLUU has its quarterly earnings release on November 6, 2018 (source GLU.com) and analysts are expecting good earnings. This could mean that this recent move is a run up play for earnings. The market is booming and for a stock to hold 10% gains, when the SPY is down like this is a strong move, to say the least.

For me this was just a chart setup play. Pre-market on Thursday she crapped from USD 7.30’s and looked weak. As expected, pre-market longs would bail as soon as the ticker failed to break out. I shorted this at USD 6.40 and covered my position at USD 6.15. With USD 6.12 as low of day, I was expecting GLUU to fail at one point and fall back to lows and then some. However, volume was picking up once again and she rose back to new highs.

I was expecting GLUU to fail on Friday. The market was down and my bias was that USD 6.90 – USD 7.00 would be heavy. GLUU did sell-off a few times but hidden buyers were accumulating shares and I was blind as a bat. Because, after every drop, she reclaimed. I shorted USD 6.70 after 6.85 failed to break out covered at 6.80ish because she was setting up for a break out. Same game plan when USD 6.95 failed to break out and lower highs started forming. She also failed the 20SMA and I was hoping for VWAP to fail. I entered my short at USD 6.85 and covered at 6.92 when she was setting up for more uptrend (by reclaiming the 20SMA). My final failure of the day was when I missed USD 6.85 and shorted right at the reversal at USD 6.75. I used smaller size because I did recognize the pattern. GLUU was dancing around VWAP so I knew this was going to be a but of a gamble. The dumbest thing I could have done I guess. Hindsight is telling me I should have waited for VWAP to fail and short the backside of this, using VWAP / USD 6.75 as a guide. I covered my position, like a bitch, at USD 6.85 when she bounced off the 20SMA.

My sad failure here is that I missed a perfect long opportunity. Not only did GLUU bounce off the VWAP, but also the 20SMA. Lucky I cut losses quickly, but three losses are still big losses put together. At the end of the day I gave back weekly gains. I am not pleased by this, as I was fighting the trend and I did not see the opportunities at hand. I am too biased and that is something I need to work on.

Next week I am watching: CY, GLUU, PTEN and HTZ

As the marker is down I am looking for opportunities that show significant weakness. I don’t look at RSI or any of the sort. What I do look for is volume, price action, SMA’s and the bigger picture move (chart setup). Where is a chart going, what news drives a company and what is the story behind the chart. For more info, please re-read the paragraph about TRXC. Most tickers have a story and I like to uncover these stories.

CY is a total crapper. The main reasons CY is on my list is because 1) loads of downside 2) USD 10.00 is in sight and 3) she broke trend, thus creating bag holders. The reason, IMO, that this ticker is down is because there seem to be some toxic financing involved. That is never a good this, as these can harm a company. CY bounced off USD 11.80 and reclaimed USD 12.00. However, there is heavy resistance at USD 13.00 so that level is a level that I would be watching.

GLUU might breakout. Which is good. That means smart money is driving this stock higher. As this is a “buy the hype, sell the news” play I wait for this to play out. Earnings is on November 6th and after this I am expecting a bloodbath. If earnings are better then expected there should be a follow up breakout. When smart money has left, dumb money and their dumb stop losses will be triggered cascading this position back to where she came from.

PTEN has a similar pattern as CY. However, PTEN is market sensitive. The oil and Gas commodities markets are under pressure. PTEN might reclaim some USD 17.50, but my guess is that USD 18.50 will be a tough level to crack and with adverse market conditions this ticker might sell off and break that USD 14.50 low. Downside is USD 10.00 and I am wondering what PTEN will do with that support level.

HTZ is a company with loads of range, but also loads of downside too. they are under constant attack so I will trade this ticker accordingly. With USD 13.00 in sight, I am expecting more downside as long as that 50SMA resistance holds.

THE OVERALL MARKET

The overall market is under pressure. With a looming China trade war and the potential FED rate hike, “investors” are protecting their capital. Also commodities are under pressure, which adds plenty of risk in the Oil and Gas markets.

IMO the market was running too fast and smart monies are protecting their ASSets. My guess is that dumb monies are late to the party already. They will start to cover their positions too when they see that this economy is artificially held up. Fundamentally the world is in so much debt. Not only are home owners under pressure, there seems to be a world wide shortage of housing. That means that retail buyers will risk more capital (to buy the -artificially expensive-  house with more borrowed money). IMO loans will default again soon, dragging the normal people down with them. Banks and tutes should have buffers by now for such occasions. However, does greed still rule the world or have we finally learned our lessons? Don’t forget, history repeats itself!


 

SERVICES THAT CAN HELP YOU

For trading large and mid caps is hot business, Tandem Trader offers some insight on how to trade them.

Kindly click the following link here for more info on Tandem Trader:

Tandem Trader DVD

Also, if you are interested in short selling, you should check out Trading Tickers, which contains two important strategies 1). shorting parabolic moves and 2). buying breakouts.

You can find it by clicking the following link:

Trading Tickers

I hope you enjoyed this blog entry! As always, feel free to share this post!


If you are interested in Investors Underground and would like to learn more, please click the link here: Investors Underground.

  • kindly note here that this should not be treated as advice, trade advice or any of the sort. Always trade your own plan, cut losses quickly and never follow any alerts. Always do your own research!

 

 

 

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