Recap: Sabato's Market Watchlist 8/9-8/13
Welcome back everyone! We had another great week at True Trade this week! Members reported $3,358 in profits this week, but remember, that's only reported profits!!
In this blog, I will get into some further detail about why I picked these trades, how I would execute them, and how they played out. Let's get into it!
You can review the watchlist blog here. If you want to skip down to a certain play, click the corresponding link: $PYPL, $MRNA, $FUBO, and $ZM. Bonus Plays: $MCFE, $NVDA, and $MARA.
1. Paypal: $PYPL:
Why I picked this trade:
$PYPL found nice support off $268.5 area after it's earnings gap down and rebounded nicely. I wanted a continuation of this buy up of a good stock on sale. I was looking for $PYPL to break $282.22 to the upside. This level proved to be a key level where Paypal gapped down and recently rejected. My idea here is that if Paypal can reclaim this level, there is a nice gap to fill up to $286-288 area and eventually highs down the road. Am I saying highs were going to happen in one week? Absolutely not. I was just looking for a break of resistance and a gap fill. Fortunately, my technical analysis (TA) yielded good results, but the play worked out for the downside. Classic example of read the market and adapt, but don't do so foolishly. That is where negative emotions come in to play and start steering the ship.
Here's what happened:
$PYPL made a run at $281 on Monday morning right at open, then sold off
It broke the 30 minute uptrend, found support on $278, then tried to break back above the uptrend, but rejected (this is a great example of support turned resistance)
At this point, $PYPL broke my first key level to the downside (the uptrend). I'd look to go short (puts) if it experiences strong selling pressure through my next support to the downside ($275.9).
This is exactly what happens on Tuesday. Take a look below.
30 minute chart:
Notice the yellow circle where we broke below the 30 min uptrend from the previous week, retested, and rejected again. We then finished flat for the day. On Tuesday 8/10/21, we rejected a key high from the day before (pink circle) and continued downward, indicating a good opportunity for a short play. Let's look at a 5 minute to see how to time this short play considering the $275.9 level.
5 minute chart:
How I would execute the trade:
1. Once we reject the $280.1 and fall below the VWAP (pink, curved line), I would enter my start position (aka early entry) on a retrace back to the VWAP, which would be the wick of the 7th candle from left on this chart. I would then add a bit of size once we break below the point at which the retrace back up to the VWAP began, which was around $276.9. A profit target would be support at $275.9, then let one run beyond with a trailing stop loss (SL).
OR
2. I would use the break of the VWAP to the downside as a bearish indication but wait until we close a 5 minute candle under the key level of $275.9 to enter and use that same $275.9 level as a SL. As I gain profits, I'd have a trailing SL at profit percentages I set for the trade with a hard SL at break even (worst case) or at a certain profit percentage I already made (best case) if I want to let the last contract run. This ensures a green trade stays green.
How it played out:
I personally did not take this trade. I was originally looking for the upside and did not have an alert for the downside set (rookie mistake). If you combined TA and good adjustment, this play worked out nicely on the downside.
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2. Moderna: $MRNA
Why I picked this trade:
$MRNA had a massive week early last week and started a range/downtrend on a 30 min chart. $394 was proven resistance twice, so this was key level I wanted to buy a dip off of with further confirmation if downtrend was broken to upside.
Here's what happened:
Moderna came out of the gate quick and did not get to my buy level of $394, so I let it go without me.
Later in the week, Moderna came out of the clouds and back down to Earth, but it had above average selling volume right through my $394 support, so I knew not to buy the dip here. My plan was void on two fronts, so I stayed out of this trade. See below.
30 minute chart:
How I would execute the trade:
Simple: I would not. This was a void trade. Trying to salvage a trade like this would be against my plan and most likely end very badly. The basis for the trade was foiled, so I stayed away from it, even though one of my next key levels served as support.
How it played out:
Void setup on this one. Don't try to force a trade in this situation. Great opportunity to practice controlling emotions and being discipline.
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3. Fubo TV: $FUBO
Why I picked this trade:
$FUBO had a nice range it had been in for several weeks. With earnings comin up, I believed a big move would be on the horizon.
Here's what happened:
Fubo had a real nice move Monday below my sell zone in read
I was eyeing a break of this zone, so I stayed out of any trades even though there was a nice $2 move to the upside
Because of this nice move to the upside above my sell zone, I was waiting to play a retrace to the top of the sell zone on the following day, and that's exactly what I did.
How I executed the trade:
I waited for a rejection of the $28.56 level, which I got.
I entered 2 contracts when Fubo was at the bottom of my zone ~$27.58
I was looking for a big bounce off this zone, which I did not get
I cut this trade for a loss once I got a 5 min candle close under $27.58.
This play ended up being a slow burner all day, but with theta, the contracts were a very small gain, if any, depending on entry. I did not want to play a earnings lotto/yolo (aka, a complete gamble on earnings news) because that was not the plan going in. Another analyst took this lotto and made some profits though! Fubo made the move I wanted, but it was overnight because of earnings. No harm, no foul as I cut this for a small loss. Look at the 5 min chart below. Note the spike in volume the morning after earnings were reported.
How it played out:
I took a $62 loss, or a $31 loss per contract, which was about 24%. I keep my stop loss for some day trades between 20-30%. I'm okay with this trade, though, because I followed my TA and SL rules.
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4. Zoom: $ZM
Why I picked this trade:
$ZM had a clear resistance at $404.11 which I was hoping for a bounce off the 200 and 20 SMA to break this. It also had an uptrend on the 30 min with higher highs.
Here's what happened:
Zoom opened flat on Monday 8/9/21 well below resistance and closed below my key level of $385.27
Tuesday, we made a run above $385, but again closed below and even further, even below the next key level of $373.43. This was an indication of more downside to come if 200 SMA was not kept overnight. This was right around $373.43.
We opened right above $373.43, but quickly fell below.
5 minute chart:
How I would execute the trade:
The upside did not seem likely after the break of 200 SMA to the downside and 2 key levels. Because of this, I would look for entry on the downside.
For early entry, I would enter puts below $385.27 on 8/10/21
For further confirmation, I would wait for break of $373.43 and enter on break or retrace to VWAP on a 5 min chart. This happened on 8/11/21
How it played out:
I did not take this trade either, although the TA was accurate. I was hoping for a big break above resistance, and I did not really look for a trade to the downside. This fell to the bottom of my watchlist, but there was still a tradeable play here.
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Bonus plays:
I won't go into too much detail here as usual because I like to leave these for you to review and see if you see the key levels, how the stock reacted, and figure some things out on your own using what I just discussed! Remember, every play is unique, but a lot of the same technique can be applied over and over to the same scenario. I will discuss $MCFE though.
$MCFE: So $MCFE announced a one time massive dividend of $4.50/share. Considering the stock only costs around $30/share, it seems like a great deal. Well, I need to do more research, but essential, the stock got bought up on the news, then the price decreased by the amount of the dividend. This essentially cancelled out the dividend and the move downward. Again, this is the first time I have seen this, so I am researching it. Please comment if you've see this before!
$NVDA: wanted to see $NVDA a hold of $202.7-203.7; this was not held.
$MARA: wanted to see $MARA break $34.87 and continue. Was very choppy.
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That's if for this recap. I hope this helps you understand my style more and explains my methods. It was a great week for call outs! Join our discord for free. Let me know you saw this post!
-Sabato
Check out past watchlist @ https://www.truetradellc.com/blog/categories/watchlists to see if any plays are still live or if the levels truly work 👀
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