Anatomy of a Parabolic Short: Day Trading Technique

Hey folks,

Here's a Day Trade i made today in my personal account. It was a very slow day in the market but while running my INTRA DAY scans i saw this trade setup and here's how i played it. I rarely short stocks in a bull market but this one was a rare exception.

I like to use BOLLINGER BANDS to help spot potential OverSold and/or OverBought stocks to Buy or Selll(short).

Note: this trade for experienced traders only. Rookies, please stay away from this type of trade setups until you get some more screen time under your belt.

I entered the trade in 3 separate pieces and averaged entry was $21.85-ish while holding 13,000 shares. This trade was good for a quick $2000.00 gain... coulda, woulda, shoulda been much much bigger with a lil more patience but as you already know, i am the "impatient trader". 
My stop loss was 10 cents above the $22.00 round number. 

Hope it helps!

Date	Symbol	Subject	Action
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.67	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 1400 GSM @ $21.6699	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 300 GSM @ $21.668	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.67	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 300 GSM @ $21.67	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.67	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 400 GSM @ $21.6699	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.66	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.67	Executed
4/2/2015 3:01:56 PM ET	GSM	Bought to Cover 100 GSM @ $21.67	Executed
4/2/2015 3:01:23 PM ET	GSM	Bought to Cover 16 GSM @ $21.7	Executed
4/2/2015 3:01:12 PM ET	GSM	Bought to Cover 600 GSM @ $21.7	Executed
4/2/2015 3:01:11 PM ET	GSM	Bought to Cover 4500 GSM @ $21.7	Executed
4/2/2015 3:01:11 PM ET	GSM	Bought to Cover 2420 GSM @ $21.7	Executed
4/2/2015 3:01:11 PM ET	GSM	Bought to Cover 300 GSM @ $21.7	Executed
4/2/2015 3:01:11 PM ET	GSM	Bought to Cover 800 GSM @ $21.7	Executed
4/2/2015 3:01:10 PM ET	GSM	Bought to Cover 100 GSM @ $21.7	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.628	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 51 GSM @ $21.62	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 153 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 6 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.65	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 54 GSM @ $21.65	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.63	Executed
4/2/2015 3:00:35 PM ET	GSM	Bought to Cover 100 GSM @ $21.65	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 500 GSM @ $21.9316	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 65 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 403 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 92 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 46 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 54 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 40 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 200 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:11:31 PM ET	GSM	Sold Short 100 GSM @ $21.93	Executed
4/2/2015 2:07:51 PM ET	GSM	Sold Short 1800 GSM @ $21.86	Executed
4/2/2015 2:07:51 PM ET	GSM	Sold Short 100 GSM @ $21.86	Executed
4/2/2015 2:07:51 PM ET	GSM	Sold Short 400 GSM @ $21.8666	Executed
4/2/2015 2:07:51 PM ET	GSM	Sold Short 2700 GSM @ $21.8666	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.77	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.77	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.77	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 400 GSM @ $21.7601	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.76	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 115 GSM @ $21.76	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.76	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 200 GSM @ $21.76	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.76	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.75	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.75	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 285 GSM @ $21.74	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.75	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 2200 GSM @ $21.75	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 800 GSM @ $21.75	Executed
4/2/2015 2:05:37 PM ET	GSM	Sold Short 100 GSM @ $21.76

Power Earnings Gaps

Hi folks,

I wanted to share with you all a specific watchlist which i track closely in my daily routine. I call it the "Power Earnings Gappers"(PEG) watchlist. The idea is pretty simple: I simply wait till AFTER a stock(company) reports their earnings and watch it closely and see how it closes on that day. If i see a STRONG candle on humongous volume on the close, i automatically add it to my "Power Earnings Gappers"(PEG) watchlist.  This watchlist will essentially hold only the "winners". Stocks that reported outstanding earnings and the stock reacted very positively. Stocks that act well after earnings reports have a reliable tendency to keep running higher.

Some of these names end up as either "Trade Alerts" for ART OF TRADING members and/or actual setups which i email to AoT members as well. Some people might say, these stocks are 'too extended and hard to buy them now'; But I do not mind chasing stocks that reported great earnings and are now showing strong technical qualities as the chance of these stocks running even higher is very strong. Sometimes, you have to pay up for a quality name that has proven itself.

Here are a few examples I've added to this list recently.

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The 11AM Avalanche Wedge

Hey everyone,

I wanted to share a post on a "DAY TRADE" setup i look for daily. I call these the 11AM Avalanche Wedges. Over the last few months, what i have noticed is around 11AM (somewhere between 10:30AM and 11:15AM stocks that fall in an "avalanche" manner intra day, tend to find bottoms around 11AM). I don't know why or how it happens, it could be Algo related. Not exactly sure why but i see often enough where i take these intra day trades often. Here's a perfect example of a trade i did today in AMGN.

This trade was good for a quick $1,700 profit. 

AMGN - 10:56:53
Bought 2000s @ $152.124 - Total: $304,252.75

AMGN - 11:09:44
Bought 1000s @ $151.825 - Total: $151,829.75

AMGN - 12:00:27
Sold 1500s @ $152.5341 - Total: $228,791.34

AMGN - 12:02:53
Sold 1500s @ $152.7177 - Total: $229,066.73 

The key is to find a solid company or ETF: Stocks i like to use for these trades include:  NFLX, AAPL, AMGN, IBB, SSO, TQQQ, AMGN, BIDU, GOOGL . You get the idea.

I like to enter in 2 or 3 pieces by slowly layering into the trade as the stock starts to wedge and show signs of sellers "drying up". Has to be a very sharp selloff from the open, a GAP UP that fades in an avalanche selloff that forms a WEDGE is the most ideal setup.

Hope this helps!

NEW Stock Setups To Watch

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Trade Like a Chameleon

In his book, Bo Yoder's writes: 

"For every style of trading there will be a "perfect" market environment. When the market is aligned to the strategy that you are trading, every trade will work itself out smoothly, losses will be far and few between, and you will feel on top of the world as you watch your profits accumulate! ......Sooner or later the market environment will shift, if ever so slightly, and losses will once again begin to appear.....This constant cycle from "zero" to "hero" and back to "zero" is why i believe speculation as a business has such a high failure rate."

This is a subject that you will hear all top traders talk about(Jason from Leavitt Brothers did several videos discussing this important issue).

This i think is one of the many keys to trading survival. The trader's ability to adapt very quickly to an ever changing market environment.

For example : Traders who flourish in a momentum/trending market will take overnight or swing positions in highly shorted and/or 'MoMo 'stocks,  ride them out for big squeezes and bank 'big money' . This strategy works great: you'll often hear traders say 'trading is so easy'. Mistakes are quickly recovered and bad trading habits are rewarded for a lack of a better term. Many traders will even feel unbeatable but once this trading environment that was so conducive for that particular style starts to fade, this same strategy will be responsible in taking back most of these traders' hard earned gains that they accumulated during trending/Momo markets simply because they failed to recognize a market shift.  As the markets ebb and flow from trending to choppy to corrective , trading styles also need to ADJUST IN ORDER TO ONLY KEEP YOUR GAINS but also SURVIVE.

As traders who wanna survive and be very good at this game, it is vital that we analyze and recognize quickly what type of market we are in. It's not about being "bearish" or "bullish" its about being a "chameleon" and by that i mean, traders have to be constantly be willing to ADAPT to the constantly changing market environments and never stubbornly hold on to one bias blindly.
We need to be ahead of the 8 ball and rarely behind. The quicker you recognize the shift, the more of your money you will be likely to keep and make much more down the road.

Happy trading!

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