ALERT: HUGE LOSS SHORTING THE MARKET OR OPPORTUNITY!?
In a Nutshell
Traded MSTR short for $5,400 profit after it bounced off the EMA and failed to make new highs, closing the full $200k position in shares. Emphasized skipping forced trades on names like MSTR when direction is unclear and waiting for clean overbought reversal setups like Marvel Technologies or WDC instead. Warned that all-time highs in NASDAQ and SPY plus 19% odds of an FOMC rate hike in three weeks signal caution on leverage, with risk management always prioritized over holding overnight for potential gap fills.
These notes were generated by AI and may contain inaccuracies.
Both the NASDAQ and the S&P 500 made new all-time highs today. Marvel Technologies announced good news and experienced a huge gap up. The trade setup was an overbought reversal within a very short period of time. The initial drop was missed, but after waiting for indication of resistance, the stock sold off. Position was entered on MSTR after it bounced off the EMA and retested. After pulling back without making new highs, the position was fully closed for a profit of $5.40.89.
The trade was executed with shares rather than options. The position size was approximately $200,000. This trade exceeded the daily goal. The Marvel trade was described as efficient: quick in, quick out with clear opportunity visible to anyone. The setup included waiting for indication of the retest after the gap up, with gap down potential recognized as a risk factor.
The LPP team was referenced, with encouragement to watch today's live trading session. Non-members can join for $1.30 per day. Benefits include watching live trading daily, seeing both good and bad trades. A recent live session can be viewed before joining.
Dell Technologies was mentioned as having a nice push up with gap down potential if it sells off. MSTR trades have felt inefficient lately despite still making money, described as an uphill battle. The contrast was between forced trades on names that don't meet criteria versus clear opportunities like Marvel Technologies.
The importance of not forcing trades on stocks that may be favored for investment reasons but don't present actual trade opportunities was emphasized. Every day is not necessary for trading, especially when criteria are not being met. Traders should ask themselves what their ideal setups are: overbought or oversold reversals, momentum breaks, or when direction is super clear.
An open short position on MSTR was mentioned, with plans to add more and close out when it pulls back. MSTR has been more bullish than bearish lately, requiring respect for the trend. The recognition that MSTR does crash eventually, but timing must present itself naturally.
WDC was used as an example of an overbought reversal trade. It was shorted yesterday with both sides traded, resulting in $4,000 profit. The goal was a big push up followed by selling off to fill the gap down, especially based on Toshiba news. The position was closed out daily for risk management purposes.
Risk management and position size management are stated as first priorities. It's easy to look back and regret closing positions early, but risk management takes precedence. The reminder that having the right idea about preferred setups should be the focus, even when sentiment and direction aren't favorable on a given day.
Timing is emphasized as super important in trades, ensuring direction and market sentiment are favorable. Having the right idea about an overbought reversal with gap down potential to previous lows doesn't guarantee success if timing isn't right. The question of whether traders have a good eye for opportunity was posed, asking if desired trades end up fulfilling expectations.
The danger of holding positions overnight based on hindsight bias was discussed. While easy to see missed profits of 5-6% after the fact, the opposite scenario of gapping up to previous highs of 465 was presented as equally possible. Risk management should always come before making money.
The key message is focusing on good quality setups rather than forcing trades on MSTR when direction isn't favorable. Overbought reversals or oversold reversals work much better and feel more efficient. These trades don't feel like an uphill battle compared to forced positions.
According to the Fed rate monitor tool, there's now a 19% probability for a potential FOMC rate hike in 3 weeks and 1 day. FOMC or Fed minutes report is scheduled for tomorrow around 2 p.m. NASDAQ and SPY are both trading at all-time highs.
At overbought levels, caution is advised but not fear. Positions should not be overleveraged at these levels. If average purchase price is near all-time highs, overleveraging doesn't make sense given that markets always pull back after ripping. Pullbacks are part of the process and should be welcomed for better entry opportunities, especially for long-term investors.
All red flags are presenting themselves at these overbought levels. When sentiment begins to change, markets follow. The reminder is to be calculated rather than scared at overbought levels. Position size should be tolerable if markets begin to pull back, as everything will likely sell off if NASDAQ and S&P 500 decline.
The trading application being used is the Webull Trading app, which is commission-free. A $1,000 giveaway is mentioned for Sunday, requiring use of their link with a qualified deposit of five dollars. The goal is to end the year on a green note.
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