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Short Trades Category Updated + Market Commentary

The following short trade ideas have either hit one or more profit targets and/or exceeded their maximum suggested stop & have been moved from the Active Trades category to the Completed Trades category, where all associated posts will be archived indefinitely for future reference. note: All of these trades were already highlighted in the trading room & in the recent Short Trade Ideas video updates. This is simply a final front page update to those trades with the calculated gain or loss percentage for tracking purposes.

On a related note, I would like to add that the unusually high failure rate on these recent trades is largely attributed to the fact that many of these trades were entered around the time that the broad markets made that very convincing & impulsive breakdown below the recent 2 month trading range two weeks ago today. That breakdown proved to be a whipsaw signal, with the markets, especially the tech-heavy QQQ, snapping back into the trading range. I can honestly say that other than the obvious regret of seeing so many trades stopped out in relatively short period of time, I have zero regrets on adding a fair amount of exposure around that time as by nearly all accounts (high volume, impulsive selling, negative divergences confirming, etc..) every thing that you want to see to confirm a breakdown from such a well-watched support level/sideways trading zone was in place.

I would do the same thing over again, just as I've done many times in the past on nearly identical breakdowns, such as the big New Year's gap at the beginning of this year, which kicked off of the most profitable shorting opps that the market has presented in years. I will also say that I believe that while some might consider that failed breakdown a bear trap, the very fact that the market hasn't exploded strongly to the upside, which is typically what we see immediately following a bear trap (vice versa with a bull trap) indicates that there might not be a sufficient amount of buyers left in this market as the follow-through buying in the wake of those recent breakdown in every major US index have been extremely underwhelming.

AMAT: Exceeded the suggested stop of any move above 30.56 for a 3.9% loss before reaching any of the profit targets. AMAT still looks likely to be headed lower following the recent backtest of the wedge & may be added back as an Active Trade very soon.

CDE: This silver mining stock was shorted on an intraday break below the 12.22 level but snapped back to regain that level by the close, going on to slightly clip the relatively tight stop of any move above 13.10 for a loss of 8.1%. CDE still looks likely to make a sustained break below the 12.22 level & is one watch to be added back as another Active Short trade soon, depending on how the charts of GLD, SLV, GDX, SIL & CDE play out going forward.

DLB: Exceeded the suggested stop of any move above 50.83 for a 3.1% loss. For those that gave this one a little more wiggle-room, a stop above yesterday's high looks objective.

NANO: Exceeded the maximum suggested stop of any move above 21.92 for a 4.9% loss.

NVDA: Exceeded the suggested stop of any move above 63.90 for a 5.1% loss. NVDA still looks very much poised to fall as the recent stop-clearing run in the tech sectors & semiconductors only put in a marginal new high which was a second, consecutive divergent high. As with many of the recently stopped out trades, NVDA may soon be added back as another Active Short Trade.

PCLN: This one was intended as a long-term swing short trade based off the weekly charts a while back with a stop on a weekly close above 1452. The stock closed last week at 1460.05, mere basis points above the stop level & although the longer-term chart still appears that a meaningful trend reversal is likely, PCLN may or may not be added back as an official trade idea anytime soon, as the daily charts aren't as compelling as some of the other trade ideas at this time.

QQQ: Exceeded the suggested stop of a 60-minute close above 117.35 to print a 60-minute close of 117.59 last Thursday for a 1.8% loss.

SMH/SOXL: Exceeded the suggested stop of any move above SMH 67.30 for a 2.4% loss. SMH & the semiconductor sector still looks poised for a substantial correction and is on watch for an new short entry.

 

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Sep 23, 2016 1:14pm|Categories: Completed Trades - Short|Tags: , , , , , , , , |6 Comments

6 Comments

  1. snp September 25, 2016 11:50 am at 11:50 am

    I would say these were all fairly predictable. a better strategy would be to set shorting levels higher and take profits when you have them. no one ever went broke taking a profit. as I have said there is a pattern here of shorting on the breakdown, staying in too long, and watching the trade move negative. hate to say it but often the stop levels on these trades are the levels where I start becoming interested.

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    • rsotc September 26, 2016 9:50 am at 9:50 am

      I appreciate your thoughts on this but once again have to respectfully disagree. Of course, in hindsight it is easy to say these, or any, short trades that had an initial bounce that exceeded the point where they broke down below a wedge were shorted “too early” but I’ve traded hundreds, if not thousands of wedge breakouts, long & short (falling & rising wedges) over the years & can say this: Sometimes, like with most of these recent trades, you do get that initial snap-back rally that takes prices above (when shorting rising wedge) or below (when going long on a bullish falling wedge breakout) the level where prices broke out of the wedge & sometimes you don’t. If I get some time today, I will share some examples of wedge breakouts where prices either exploded higher (as wedges often act as coiled springs) or at least never looked back, with the stock continuing in the direction of the breakout without any reactions or snap-backs to or even near the entry point until the trade was very profitable.

      Sometimes I will initiate a short position at the top (or bottom) of a wedge, sometimes while prices are still within the wedge & sometimes even on an overshoot of the wedge at times (somewhat rare but one of the highest R/R trade entries when they happen). I will say with the utmost confidence, that the failure of the trades above is almost exclusively or at least largely due to the fact that many of those trades were entered around the time that the broad markets broke down below those 2 month trading ranges but failed as despite clearly bearish chart patterns, the rally in the broad markets following that false breakdown just over two weeks ago, particularly in the $NDX/QQQ, which has the biggest impact on those tech related trades, was the primary reason that each of those trades experienced a snap-back rally which took them back above the entry point & to the relatively tight suggested stops that I decided to list on those trades as the trend in the market was (and still is) indeterminable/sideways at the time.

      As I stated in the video last week, that breakdown in the market below the trading range a couple of weeks ago was confirmed by just above every metric possible that you want to see for a breakdown & I would short it again just as I shorted the similar breakdown below the late 2015 trading range following the New Year’s gap (a perfect example of how some breakdowns are immediately followed by impulsive selling & never offered those waiting for a snap-back rally back above the breakdown level a chance to get in, instead leaving them long or in cash for one of the most profitable shorting opps in years).

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  2. jegersmart September 26, 2016 4:53 am at 4:53 am

    Short from a higher level? I don’t think anyone would disagree with your “strategy”…lol

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    • snp September 26, 2016 6:26 am at 6:26 am

      you may misunderstand: an example would be shorting from the upper line of a wedge rather than the breakdown out of the wedge. or equal. short from upper resistance, not break downs.

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  3. jegersmart September 26, 2016 6:35 am at 6:35 am

    Yes, I thought that’s what you meant and I agree to an extent – I prefer to get in early or at least as close to my stop as possible – but it was just the way it came across lol

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  4. snp September 26, 2016 3:07 pm at 3:07 pm

    @rsotc– I understand your position. all the trades I think at one point were winners. how about suggesting taking some profits, letting the second half run, and setting stops at B/E so your members can profit? not sure by your posts that that is being done here.
    also I think as I commented, 18 months of price support has to count for something so that first bounce was fairly logical.

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