This week's lesson.
I am going to talk about some of the tickers that I traded this week and the week before. I’ve noticed recently that we have been getting extreme volume. Some tickers can trade around $300 million shares in a day and some tickers can trade $400 million shares in a day as well.
March & June
Pretty much all the tickers are trading that type of volume range, so a lot of patterns are kind of changing. So, I selected a few tickers that stand out and showed some of the differences by comparing it to the pattern that we traded one or two months before. So, before I start this video, we have a conference coming up. It is a virtual conference. It will be hosted between November 14th to November 16th. If you are a trader or if you are interested in trading…
I think it will be a great opportunity for you guys to attend. If you want to find where to attend, I will place a link below. Make sure you click that, that is where you can register for the conference. We will be including a lot of the technical analysis and data analysis because we have been getting tons of data, especially in 2020. A lot of actions, so I think it will be worth it for you to attend and learn different perspectives or different ways to think and how to really become a better trader.
We’re going to talk about four tickers. I will place those four tickers into different categories, so it will be much clearer for you guys to see it and to be able to recognize the pattern in the future.
So, let’s start with the $SUNW. This one will be shorting into the resistance pattern.
$AGE & $PPSI. It will be a gap up short/ first green day short and $WWR we will be shorting into a multi-day runner and potentially buying multi-day breakouts. So, let’s start with $SUNW. This will be a short into resistance pattern, and you can see that there are three levels of resistance. So, the first level will be $8.50, second level will be $5.00 to 5.53, which will be the longest consolidation and most ideal resistance you can risk off. The third level will be the $4.00 area. For most of volume that’s been traded in the three resistance levels, the first one will be $8.50, the second one will be $5.50, but the last one, because the stock is already being sold out and it’s volume is drying up and losing liquidity, that will not let that stock trade that much volume, especially when it’s late in the day. So, ideal resistance is $8.50 and $5 to $5.50.
For September 24th, we have a spike from $3.30 to $5.00, in total, we expect about 50 to 70 percent.
I think 70 percent is the maximum. So, for shorting into resistance, I don’t really recommend anything that is below 70 percent because in 2020 we have been getting a lot of ticker s that can push extremely hard on the open. And normally their extension will be much stronger compared to the last couple of years. So, from my personal preference, I would rather choose something that is over 100 percent than something that is below 70 percent for shorting into resistance pattern. So, in this case, $SUNW, I did not really place a trade on it because I was expecting that it would push up more (percentage) and could come up after the open. The ticker, we expected to push from $4.00 to $5.00.
I talked about the first two layers of resistance will be $5 to $5.50. You can use that resistance level to risk off, but personally I didn’t really short into it because I was looking for a larger push in terms of percentage right at the open. It turns out that it didn’t really give me sufficient volume. So, I did not really short into it because we are looking at, in terms of risk reward, the first layer of support will be $3.20 to $2.40. So, you kind of have to cover before the support area which will be around $3.60 to $3.70 area. We are trying to get the maximum reward from the pattern, you want to get the top which is $4.70, and the bottom will be $3.70. So, in total, maximum is about 15 percent to 20 percent reward.
Normally you can't really top tick a stock, so on average you want around 10-15% reward, which is not very good for a decent pattern.
$PPSI gapped up 70-80% and had a massive push. Many people were trying to buy the breakout.
Both extended over 300% within the first few candles. $2-4, about 100%. $PPSI went from $3 to $10. When the stock extends that much, I do not recommend shorting into the morning spike. How will we figure out if the stock will extend that far? If you are looking at the premarket volume. If the volume exceeds 10-15 million, that should tell you to not try and short within the first 30 minutes. If a stock is trading mass volume in pre-market, it will generate 4-10x more once the market opens (throughout the day) that type of action is parabolic. It is very hard to get short into that much volume. You don’t know where to risk off because there are no stats to back you up. (Shorting into morning spike).
The last ticker is $WWR. This is the most frequent pattern that I talk about.
A lot of people are looking for a long strategy and they think this is a decent one. Let’s look at the historical chart, the first layer of resistance is $4.50, and the 2nd layer is from $9.30-$9.50. When the stock starts to spike and break through the $4.00 area. I don’t recommend shorting into resistance on a potential multi day breakout. We have a breakout and massive resistance at $9.00. Its trading between $40-60 million volume. We don’t know if it is likely to break the $8.50-$9.00 area. I wouldn’t look into buying $WWR as a multi-day breakout.
Let’s look at the intraday chart. We have $18 as premarket resistance, we have a morning push into $14.50, so when you’re shorting at $14 risking $18, I think the risk is too wide. I don’t recommend that. Then we’ll have this choppy action throughout the day. It made the stock not tradeable. When looking at a multi-day runner and looking for the first potential red day. We want to see the highest amount of volume traded in that day. Normally between 200-400 million. Then the stock didn’t give us that type of volume. It was very choppy over these 2 days. We have these wide consolidation areas between $10-$14.
So, you can’t find the potential risk off level. That is the most dangerous factor. The only way that I can think of trading $WWR is shorting around $14, risking $18. This would be a very small position because the risk is too wide. I would probably cover into this spike around $10-11 to $12ish. I would be making around 5% return, with the barrow fee it’d be close to $0. You can see the stock was fading 2-3 days after. From my personal perspective, I think you should skip this type of tickers like $WWR if you can’t catch the top, or the risk is too wide. That will be it for $WWR.