260 [Let’s make this a triple digit year! Jan 5, 2021]

  • FUBO no I’m not gonna chase this gap up, only if it pulls back out of the gate and holds that pullback then maybe, but I’m not gonna chase it, unfortunately it is gapping up a lot. It’s a classic mean reversion setup, it’s down 62% from the highs, straight down hasn’t had a green day and now it’s found support on the 50day, it’s a good decent chance of a bounce but obviously the gap up is gonna ruin the odds here. FUBO lost orls, this is what happens when these mean reversion plays gap up or down hard, that’s the risk, this is why you don’t want something like this to gap up, you want it either red or as close to b/e as possible. And now all the gap up chasers are getting f*cked. Lets see if it can find support if it fades back to the 10ema and finds support there, maybe we can get an opp mid/late day. FUBO did find support on the pullback, I think it could bounce back to mid 30s very easily but it’s all about finding a tight high probability entry, ideally it goes sideways builds hls and has a tight range over the next few hours, then if it starts breaking out of that range mid/late day I may buy it, if I can find a setup where I can risk no more than a dollar, but I just don’t see it yet. FUBO is getting tight, actually I think there could be a good r/r setup here soon. FUBO this 29.50 range is still intact, if it can pullback maybe go sideways a bit more.
  • QQQs tested the 20day yesterday, could very easily hold, just the lack of setups that’s what worries me. Indices look fine, but they’ve been fine for two weeks while many of the momo stocks are down between 30-60% so the indices don’t really tell the whole story, gotta go by a stock by stock basis, sector by sector basis. So far indices reclaiming the 20day nicely but still on backside on the 60min, we’ll see how they close, bit too early to tell. The best way to determine if it’s time to step on the gas again is when you start seeing a lot of things setting up, and rn we’re just not there, it’s been very selective, such sporadic random sectors, not very necessarily important sectors, these small sectors, Gold, Weed etc. So still don’t get overly aggressive on stuff.
  • So IWM is right between the rising 20day and the declining 10day, so as long as it can’t reclaim the 10day it’s backside, so gonna use yesterday’s highs as stop on TNA.
  • O&G only sector where I see good setups, NOG, MRO, XOP, GUSH tripe etf also looks really good. But that’s pretty much the only sector where I see setups, so that’s never really a good thing when you only have one sector that really looks good, generally not a great thing. Oils are strong, bought some XOP orhs. Bought some GUSH orhs. A lot of o&g names having really beautiful breakouts, pretty much the only sector that looks good rn. XOP look how beautiful this thing is, pretty much every oil stock looks like this rn, it had a big move back in Nov2020/early Dec2020, big orderly move was surfing the 10day, orderly pullback, found support around the 20day, started building hls, built a range got tighter, and now it has a breakout. This is what a 5* setup looks like. A lot of oil stocks look exactly like this rn.
  • 2011 to 2015 was the year of biotechs, made huge moves and then they kinda went sideways for the next 5years.
  • was really excited about but unfortunately it’s gapping down 27%, so annoying, it’s so hard to get these perfect perfect setups, you get them so rarely. I really hope this thing pushes back to 6/6.50 intraday then fails, not gonna chase this gap down, such a big gap down. Can it go to sub 4 today? Absolutely but I’d rather see this thing pop out of the gate and then fail the pop. BNGO straight down, damn. So now BNGO is bouncing back too, that’s what happens when these mean reversion plays gap up or gap down big, it’s gonna be incredibly hard to trade them, the odds, it’s all about the odds, and the odds of success do decrease significantly when you get these big gaps on these mean reversion candidates. Now BNGO about to take out hods, this is why I didn’t want to chase this gap down, had it opened at $8 and then gone down to $4.50 would have been much better, now it already had a gap down and the downside is limited. Now, if it bounces back towards 6/6.50 and then starts failing and building lhs and maybe losing vwap later in the day or something, that could be a setup, but don’t get in front of it, this thing could go to $10 by tomos, you need for it to start showing weakness first, don’t anticipate the turn, it doesn’t have to go down, you just want these low risk high probability setups, these stocks don’t have to do anything. Okay so BNGO has a setup here on the 60min, shorted some. So it’s up what 1200% in a week, it’s not gonna keep going up forever, bc no stock does, and it’s getting really stretched on the MAs, even with this gap down, it’s down 32% from yday close but it’s still has 55% to fall to get to the 10day, so still has a lot of downside. So what I want is just to have a low risk setup on the intraday, and due to this gap down I didn’t want to do it on orls bc I knew there’s a good chance it will snap back which it did, so I just waited for this thing to bounce and for the bounce to end. And now it’s been building lhs for like an hour now. That’s what I’m looking for, low risk high probability entries. Yeah it may bounce again, but not you have a low risk entry, that’s the point. Any stock can do anything at any time, that’s why you look for low risk high probability entries, that’s where your edge is gonna come from. Stop at 5.43, bc now if you look at it the 10ema is turning down, if it reclaims the 10ema I don’t wanna be in it.
  • BTBT yeah again it’s gapping down, had it gapped up to 35+ that would have been a really good 5* setup, but now it’s gapping down it could go either way out of the gate, could go either way, it’s hard to get an edge on these things that gap down. Hm maybe late day, if this thing can’t rally and starts building lhs and looks like it’s gonna break to the downside, I’ll play it, but it’s an ignore for me out of the gate.
  • ARKK it’s still below this 20day, I think orls or if it starts breaking this trendline I’m gonna start adding short to it. ARKK and ARKG could both be long candidates, I’m short ARKG rn but it’s still building hls, not breaking down, so if it stops me out it stops me out, and I’m able to go long. I follow price action, that’s how I made 870% last year, you have have opinions but they need to be loosely held, if price is disproving your opinion you follow price, not your opinion, that’s the key.
  • QS I am excited about, I think this thing could bounce back to the 70s, make a 40/50% move from here potentially. So that’s one mean reversion trade I am excited about. QS took out orhs, went green, [bought some]. My stop is lods, or if it fails at vwap, it’s right at vwap trying to bounce off vwap, if it fails the vwap bounce I may size down on it. This is more a big picture trade for me, I’m not gonna let one tick determine what I do on it, I think if it’s gonna bounce, it could bounce to like 70. So QS bounced perfectly off the vwap test and also the g/r area which is a good sign, if it can’t hold I’ll size down. My goal is to build like 100-120kshares position I have only 80kshare rn, so gonna add more. F*ck I missed the add on QS, I started talking about Canslim. Okay so first resistance area here is this declining 10ema on the 60min, that’s the first test for the stock. QS straight up now what a perfect setup, popped, retested vwap, tested this r/g area, held, and now it’s straight up, perfect looking price action, tested some key levels held and yeah very good. I already sold a little bit, bc I’m up like 10% from entry, that’s a big move in like 20/30mins, and even if it bounces say 50%, 10% is 1/5 of expected move, so you have to sell accordingly, it’s a big move. Mean reversion trades there is no such thing as 3-5day sell rule bc the move is gonna be over, so you gotta sell when you get these big pops. Nail and bail yes. So far QS failed at the declining 10ema, so we’ll see if it can find some support here and maybe break later, it doesn’t have to go higher today this thing already made a 21% move from the lows to highs today, that’s a big move. Gonna use g/r as my stop now, there’s no reason to let this thing go red on the day, these bounce setups they kinda need to work straight away, I don’t want this thing to go red on the day that would invalidate the setup.
  • SKLZ bought some breakout.
  • BILI, learn from my mistakes, do not override, this is why you have trailing stops, bc you can think something is getting extended, you can have all these opinions oh the market is gonna pull back etc, but you will not outsmart the 10/20day, you can do it now and then but over time you will not outsmart those things. I sold 75 or so, I was happy with my 50% move in 2/3weeks and now it’s up another 30% since I sold, this is like NVAX last year, that’s why you have these trailing stops, bc you never know how high a stock is gonna go, sometimes they can go straight up for weeks and months on end.
  • TDOC looks great on the weekly, if you want like a position trade type of setup, but on the daily I think it’s a big choppy, I don’t like it on the daily, it’s not a great trading stock. But if you want a good position type of trade with a wider stop and go for a bigger move, I think TDOC could be a good candidate, setting up nicely, been going sideways for over a year, been building hls, is a growth stock, they’re doing some exciting things, this is the type of stock that really works in this market.
  • GOGO yeah I see what you see it’s in a long flag, the problem with these small caps is they kinda need some catalysts to get moving, they don’t work the same way usually like these lcap stocks where there’s institutions accumulating, these things usually need catalysts. If it starts breaking out on high vol yeah could be a setup, but rn I don’t see anything there really.
  • RMO was a 5* mean reversion setup, it was down 5 days in a row, down 52% from the highs, yeah 5*, orhs was the entry. It’s the same principal with longs as shorts, if something that’s up a lot 3/4/5days in a row, it’s not gonna keep going up forever, and the same thing with these things that make big moves and then have these big moves down, there’s a good probability they will bounce. They don’t have to, that’s you wait for these perfect setups where you have good r/r, if you’re wrong you only lose a little bit.
  • FTCH tried to break below the 20day, couldn’t look at these wicks, look at what happens every time this FTCH touches the 20day, touches it went back into the range, undercut it went back into the range, undercut it back into range, the stocks trying to tell you something, you have to listen.
  • PLG, omg this is a beautiful setup, it’s already long gone now but beautiful setup, if you got it orhs great job, amazing setup. Has a clean move up surfing the 10day, went sideways had an orderly pullback, found support on the 20day, look at this thing, every time it tried to get below the 20day it built these wicks, built hls then it got tight had this range and now it’s breaking out, such a beautiful setup.
  • UVXY keeps coming back, if UVXY starts taking out that mid 12s area, in case we get a flush this thing could easily go up like 30/50%, but only if I can have a relatively tight stop.
  • OZON, super thin but it’s a very very good looking ipo breakout, if it had 10x more volume I would be in it.
  • If you’re looking for a setup with 100% winrate you should prob look somewhere else, this is not the place, we are not living in fantasy land, you’re gonna take losses all the time, it’s all about the r/r.
  • SNOW is not a mean reversion setup, you need powerful moves. I’m gonna show which types of stocks are mean reversion stocks okay. LAZR, it was down 52% in like a week, then it bounced 75%. QS, was down 57% in four sessions. FUBO, this thing was down 62% in 5/6sessions. Those things are mean reversion candidates, something like SNOW it’s down what 22% in 2 weeks, that’s not a candidate for a mean reversion, it’s not, you have no edge, you need big big moves, that’s where your edge is gonna be.


  • Gonna do a setups blog post.
  • F*ck I missed the add on QS, I started talking about Canslim, f idiot, David it’s your fault.
  • There’s a rule of thumb if a stock trades like a dollar, two dollars, those stocks are pretty much near bankruptcy, every single one of them.

#shorting #masterclass #meanreversion

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