Holding stocks overnight has been hard lately, so I came in today flat equities.
That means I had to lean on intraday tactics, as I'll outline today with an SPY trade.
I didn't like today's setup. We were gapping up after a tough day yesterday.
But just because I don't like the setup doesn't means I won't trade it.
I adapt to the action, or I don't get paid. It's as simple as that.
In today's Redler All-Access Morning Note, I said:
SPY made a low at $273.09 yesterday later in the afternoon, which complicated things. Buyers stepped up in the last 20 minutes and now we’ll see if it holds above yesterday’s high of $276.55. If it holds, next resistance is up at the 200 day at $277.60ish.
Now let's look at today's intraday chart so you can see how I traded it based on my plan:
SPY gapped up to start the day, so mission #1 was to see if the gap held.
It did, and around 10:12 a.m., I bought SPY with a stop at the morning low of $276.62 -- just above yesterday's high of $276.55.
I added when it crossed above $277. Then it took out the morning high of $277.63.
After that I started selling, and I closed it out around $279 -- good for a $2+ gain from the original buy.
You could have followed this all live on the VTF®.
(If you want to learn my process for scaling in/out with a Tier System, check out the Path to Profits program.)
The lesson here is simple: on a gap up after a downtrend, you want to see that gap hold. And you want the market to stay above prior key pivots. Then you often get continuation in the direction of the gap. And on the downside, if the low of the day breaks, I'll typically just stop out. There's no need to press things in an uncertain market.
Facebook's (FB) Red Dog Reversal
The Red Dog Reversal is another of my favorite intraday tactics -- and Facebook had a beautiful one today when it broke below $161 to hit a low of $160.84.
Then it reclaimed $161 to trigger a long signal. With RDR's, I put my stop at the day's low.
So that's 16 cents of risk.
FB went on to break $167 -- pretty amazing! I'd look to trim, though it has room to $170.
(If you want to learn the full Red Dog Reversal process, check out the Path to Profits program.)
Positions Disclosure: As of 6/4/2019 at 1:31 p.m. ET, Scott J. Redler was long TSLA calls