These are some of the most fun days in the market. There have only been a handful of them in the last six months and they really give some amazing opportunities to ANYONE who prepares for it. The last few gap down days were when SPY was at the lows. We saw red candle after red candle and finally the panic set in it gapped down a few hundred points and the wash out came in. Typically this happens within the first one or two minutes for optimal entry.
The way I typically trade these days is by picking stocks I wouldn't mind "getting stuck in" if I am early, wrong etc. I always give myself more fire power to add on gap downs like this and typically stay out of the trade until market open. The goal for me is to take advantage of the market orders on open and any more washout as a result of it.
Today we were super prepared and the only thing I did wrong was I didn't buy enough 🙂
My whole thought today was that this whole oil Doha meeting stuff was NEVER expected to have a freeze. That was the excuse people gave as to "why oil ran" and when there was no idea, media ate that up. "NO DEAL!!" so bad!! etc ... But it wasn't EXPECTED. So to that, it smelled like opportunity. Gap it down !! In fact I thought it may go green as I wrote - and it nearly did !
Remember that time Oil gapped down and closed green? lol
Here's a recap from today and how I trade washouts.
Enjoy the video!
I've included the morning chat logs today so you can see the plan prior to market open to see why/how I prepared the way I did which are posted at the bottom.
Below are some entries and charts of the trades we did today:
Whenever trading energy names I always watch USO XLE and XOP
Here are the morning washout snags WLL bottom ended up being $9.60 I just took the offer - this is one of those times it's quick reaction that matters - PAY THE ECN fee don't be cheap !
CLF was probably the best trade idea of the day given that NUGT involves more risk than most should be taking and CPXX well that was picture perfect but the help of some heavily followed bio guys had some negative view points that took it down so although it was perfect, it definitely was unnatural but I won't complain!
CLF I had overnight from last week. I'd been buying dips for a few days, sold most before the close, and added in this morning. I scaled up throughout the day, sold a bunch $4.45-4.46 into close and holding rest over. We'll see how it goes.
CHK perfect fade right into the open volume candle and straight up. If you weren't fortunate enough to snag the wash out - where was the next ABCD set up and risk that you see? Leave a comment in the comment section!
SDRL I've been trading washouts the past few days and been holding over. I had $3.50 entry from last week had a bunch added added and sold more than 3/4s of it Friday into close given the Doha news expected Sunday. So I did start "down" compared to Friday on this but given the entry no big deal and this opportunity was an absolute gift.
CPXX as explained on the video - wrong at first but did the right thing. Nothing wrong with trading in the first few minutes off emotion but it's a scalp and if it doesn't do as expected or starts to collect and head higher GET OUT and hope for higher - that's exactly what we did!
I waited for it to blow off into the $17s $17.30-.40 and the volume bar then got short and added to winner - you can see my scale and short here:
As you can see I downsized a BIT too early but I never get angry about it as I may have been "too patient" and covered at the same spot anyway.
NUGT ended up being my main gainer with an entry then the scale which you can see below:
What is important to note here is the scale - entry to start then add, add, and slammed in when it was about to wash (or at least I thought it was going to). I was extremely happy with my covers on NUGT. I'm best out of the gate on NUGT but I absolutely have the most difficulty with it after 10:30AM and during lull when I try to anticipate direction. The best way to trade this ETF for ME is either 1) Join trend 2) out of the gate 3) into the last 30-40 minutes
AVOID OTHERWISE if you see me trading it any other time, please PM me and slap me !!
08:09:05 amInvestorsLive: CHK hoping they give us a 1-2 candle gift
08:27:52 amInvestorsLive: in a market like this I look for the big gap downers that are excessive vs. peers
08:27:59 amInvestorsLive: then ideally we get 1-2 candles in the first few minutes to react to
08:28:04 amInvestorsLive: and either scalp quickly or let them work
08:28:27 amInvestorsLive: SM WLL DNR ESV CHK CLF SDRL types and many more will scan here shortly
08:28:51 amInvestorsLive: going to watch failed follow through on CPXX - nice big gap
08:30:48 amInvestorsLive: Key today is not being too biased in any one direction - reactive trades out of the gate for sure but look at big picture
08:30:59 amInvestorsLive: let things come to you
08:31:04 amInvestorsLive: Theranos CEO on CNBC
08:34:04 amnblancha: CYTX IMMU RXDX all health, all gap up of 10%+, all up on news. Could potentially set up for the failed follow through later in the day
08:35:36 amInvestorsLive: OTIV worth eye on dips today, news a minute ago
08:35:55 amInvestorsLive: chart break $1.05-1.10 area
08:36:42 amInvestorsLive: Crude ramp
08:36:45 amEurocayman: Crude nice off that 38.50 support
08:37:46 amn2growth: Crude front mo rolled over to June today FYI
08:37:49 amelielitvin: DSCO is now WINT, fyi
08:43:43 amMikez: ^n2groth, that was yesterday fwiw
08:44:04 amInvestorsLive: dang nice gap on ORPN
08:45:00 amInvestorsLive: MDVN worth an eye for $55 push then fizzle
08:45:06 amInvestorsLive: CPXX higher the better
08:45:25 amInvestorsLive: CHK SDRL WLL MRO focus spots for me prob w/ same game plan as mentioned
08:45:57 amInvestorsLive: PTCT any big washes as well
08:48:29 amelielitvin: GBSN wait up... sub 4
08:48:39 amelkwood66: beauty on the ss swing
08:57:27 amInvestorsLive: have your plans out of the gate find the names you like most for potential washes - reactive trades on oil/gas is what I am looking for
08:57:33 amUmar: CHMA & CLMT 54 and 48% down
08:57:48 amInvestorsLive: if you're nto familiar with what that is, it's ok -- relax, focus and be patient for trades later on after the settle and set up
08:58:35 amInvestorsLive: also remember things do NOT have to bounce so if you nail a wash and rebounds don't turn a nice scalp into a full day hold/loser
09:01:39 amjoshclick: RPRX floating back up
09:02:31 amd4ytrad3: Kandi Technologies Reports the JV Company’s EV Models Receive Tax Exemption Approval