Top Swing Trade Strategy with Exact Entry and Exits

SMB Capital

12 May 202408:05

Summary

TLDRIn this trading video, the speaker outlines their top stock trading ideas for the week, focusing on GameStop (GME) and its recent price movements. They discuss their strategy for shorting GME based on key technical levels and market behavior. The speaker also briefly mentions other potential trades, including LR and ALCC, and emphasizes the importance of patience and selectivity in trading. They invite viewers to share their own trading ideas and promote an online presentation for aspiring traders to learn how to join SMB, a trading firm, and potentially trade with the firm's capital.

Takeaways

📈 The trader focuses on individual stock ideas rather than the overall market direction due to the market's light volume and lack of conviction in high beta continuation.
🎯 The trader's top idea for the upcoming week is GameStop (GME), which has been a recurring theme and has shown consistent behavior around key price levels.
📉 The trader is looking for a short opportunity in GME after a failed breakout, aiming to enter on a pop into the 1820s or up to 19, considering this as a potential failure and supply zone.
💼 The trader plans to take half the position off at 17, the support level from the previous Friday, and then trail the stop for a move down to 15 or lower.
🚫 If GME reclaims the 2-day vwap and shows a higher low, the trader will not short the stock, indicating a change in strategy based on market behavior.
🔍 The trader is monitoring other ideas such as Google, Apple, Microsoft, and smaller cap stocks for potential short opportunities, especially with events like the OpenAI conference.
📊 The trader mentions LR (a stock) as a potential short opportunity if it fails to move higher after a nice move on Friday, aiming for a short at the failure zone near $3.
🎫 The trader discusses a ticket change for ALCC to OKL, highlighting the importance of reacting to market news and changes quickly.
📉 The trader emphasizes the importance of patience and selectivity in the current market, only becoming aggressive when high-conviction opportunities present themselves.
💼 The trader invites viewers to share their watch lists and strategies, fostering a community discussion and learning environment.

Q & A

What are the speaker's top ideas for the upcoming week?
-The speaker's top idea for the upcoming week is to focus on GameStop (GME). They plan to short GME if it fails to break higher after a move into the two-day VWAP and 19, anticipating a drop back to 15.
Why is the speaker cautious about the overall market?
-The speaker is cautious because the overall market is trending higher on increasingly light volume, making it difficult to have conviction in high-beta continuation momentum trades.
What strategy does the speaker plan to use for GME?
-The speaker plans to short GME if it moves into the two-day VWAP (around 18.20-19) and fails to break higher. They intend to take partial profits around 17 and trail the position down to 15 if the downtrend continues.
What would invalidate the speaker's short thesis on GME?
-The speaker would abandon their short strategy if GME reclaims the two-day VWAP and consolidates above 19, as this would indicate potential strength.
Which other stocks or opportunities is the speaker monitoring?
-The speaker is monitoring stocks like Google, Apple, and Microsoft, especially with the upcoming OpenAI conference. They are also watching small-cap names for failed follow-through shorts, including LR and OKL.
What is the speaker’s view on LR for the upcoming week?
-The speaker is looking for a potential short in LR if there is a failed move into $3. They expect a short squeeze to fade and are targeting a move back down to $2.
What recent event related to OKL is the speaker focused on?
-The speaker is focused on a recent ticket change in OKL (formerly ALCC) and is watching for a push towards its two-day VWAP at $10-$11 for a potential short.
Why is the speaker light on trading ideas for the week?
-The speaker is light on ideas because they are being patient, waiting for high-quality setups that align with their strategy. They believe the market is slowing down and want to remain selective.
What does the speaker recommend for traders in the current market environment?
-The speaker advises traders to remain patient and selective, only putting full effort into trades when an 'A+' setup presents itself.
What opportunity is SMB Capital offering to aspiring traders?
-SMB Capital is offering the opportunity to become an in-house or remote trader, using firm capital without risking personal funds. They are looking for ambitious and determined individuals and provide training and coaching for developing profitable traders.

Outlines

00:00

📈 Market Trends and Personal Strategy

The trader begins by sharing excitement for the upcoming week’s trading ideas, focusing on personal strategies and targets. They explain how recent weeks have been focused on individual stocks and isolated outlier scenarios rather than broad market trends. Despite the market trending higher, the volume is light, making it difficult for the trader to trust high-beta swing trades. They emphasize the importance of patience, allowing the market to dictate the direction before committing to aggressive swing trades. The trader provides a brief insight into their thought process of sticking to what works while waiting for better signals from the market.

05:01

🎯 GME Strategy for the Upcoming Week

The trader's primary focus is GameStop (GME), which has been behaving well around key levels. They recount GME's recent movements, including a failed breakout at $20 followed by a drop to $17, which aligned perfectly with their trading plan. For the coming week, they plan to short GME if it reaches the $18.20-$19 resistance zone, expecting a failure and a potential drop. They plan to exit half of their position around $17 and aim for a longer-term target of $15 or lower. However, if GME reclaims the two-day VWAP and consolidates above $19, the trader will not short it.

🧑‍💻 Other Watchlist Candidates: LR and ALCC

In addition to GME, the trader mentions keeping an eye on other stocks like LR and ALCC (now OKL). LR showed promising moves on Friday, and the trader is waiting for a failed downward move early in the week to short the stock if it pushes towards $3 and fails. For ALCC, they see an opportunity around $10-$11, where resistance might offer a shorting opportunity. However, overall, the trader remains cautious, noting they are not excited about other ideas as much as GME and emphasize the need to be patient and selective in this environment.

🤔 Trading Insights: Patience and Selectivity

The trader advises being patient and selective in the current slow market. They mention having fewer ideas for the upcoming week but encourage viewers to share their watchlists and strategies. The trader highlights the importance of waiting for ideal setups where all conditions align perfectly before making aggressive moves. They encourage engagement by inviting viewers to comment on their own strategies and adjustments to the slowing market.

💪 Competing Against Elite Traders

The trader pivots to discussing the competitive nature of trading, highlighting that their competitors are elite traders who make seven to eight figures annually. The firm trains its traders like professional athletes, emphasizing dedication and continual skill improvement. The trader contrasts this with the image of 'trading gurus' who promote easy lifestyles, stating that true success in trading requires far more effort and commitment.

🏢 Trading at SMB Capital: Opportunities and Training

The trader introduces SMB Capital, one of the world’s top proprietary trading firms, and explains how the firm is always seeking talented traders to join their team, either in-house or remotely. The firm provides capital for traders to use without risking their own money, and some traders have made seven-figure profits this way. They promote a free online presentation that offers more information and outlines the steps to qualify for an interview at SMB Capital. The presentation is targeted at ambitious and determined traders, even those who are not yet profitable, as the firm focuses on molding traders with the right methods and techniques.

Mindmap

Keywords

💡Top ideas

The phrase 'top ideas' refers to the trader's main stock picks and strategies for the upcoming week. It is a focal point of the video, where the trader shares their preferred trades and the rationale behind them. This concept highlights the importance of identifying and prioritizing potential trades based on market conditions and personal analysis.

💡Entry and exit target points

Entry and exit target points are specific price levels at which the trader plans to enter or exit a trade. These points are crucial for implementing a successful trading strategy, as they help manage risk and maximize profits. In the video, the trader emphasizes these targets to guide followers on where to buy or sell stocks.

💡Momentum swing

Momentum swing refers to the movement of stocks based on the prevailing trend in the market, where prices rapidly rise or fall. The trader expresses hesitation about momentum swings due to low market volume, indicating that relying on continuation momentum in the current market conditions may not be ideal. This shows a cautious approach to timing trades.

💡Failed breakout

A failed breakout occurs when a stock price moves beyond a key resistance or support level but is unable to sustain that move, resulting in a reversal. The trader mentions a failed breakout in GameStop (GME), where the price attempted to rise past a certain point but ultimately fell, presenting a short-selling opportunity. This is an important concept for traders looking to capitalize on reversals.

💡VWAP (Volume Weighted Average Price)

VWAP is a trading benchmark that gives the average price a stock has traded at throughout the day, based on both volume and price. It is commonly used by traders to determine if a stock is over- or under-performing. In the video, the trader plans trades around the 'two-day VWAP' and monitors how GME interacts with this level to assess short-selling opportunities.

💡Supply zone

A supply zone refers to a price range where selling pressure is expected to be strong enough to prevent further price increases. The trader refers to the area between $18.20 and $19.00 in GME stock as a potential supply zone, where they expect the stock to encounter resistance and possibly reverse, leading to a shorting opportunity.

💡Short trap

A short trap occurs when a stock declines, causing traders to short-sell it, but then quickly reverses direction, leading to losses for those shorting the stock. The trader is watching for a potential short trap in other stocks like LR, hoping that a failed move down will generate momentum for an upward push, creating another shorting opportunity.

💡High beta

High beta refers to stocks that are more volatile and thus move more dramatically than the overall market. The trader notes that while the market is trending higher, they lack conviction in high beta continuation swings, implying that they are cautious about investing in highly volatile stocks due to unpredictable market conditions.

💡Selective patience

Selective patience is a key theme of the trader's strategy, reflecting the importance of waiting for the right market conditions or setups before making aggressive trades. The trader emphasizes the need to allow the market to 'show its hand' before committing to swing ideas, highlighting patience as crucial for successful trading.

💡Two-day VWAP reclaim

This term refers to a situation where a stock's price rises back above the two-day VWAP after falling below it. The trader discusses this scenario for GME, noting that if the stock reclaims this level and consolidates above $19, they would avoid shorting it, as the stock could demonstrate strength and continue rising.

Highlights

Traders are focusing on individual stocks rather than market trends due to light trading volume.

The speaker emphasizes the importance of sticking to what's working and exercising patience.

GameStop (GME) is identified as a top idea for the upcoming week, with a detailed trading plan.

A potential short opportunity in GME is anticipated around the two-day VWAP in the 1820s or 1830s.

The speaker plans to take profits at the 17 support level and trail the stop for a move to 15 or lower.

If GME reclaims the 2-day VWAP, the speaker will not short the stock.

The speaker is monitoring other stocks like Google, Apple, Microsoft, and smaller cap ideas.

LR is highlighted as a potential short opportunity if it fails to move up.

ALCC had a ticket change to OKL, which is being monitored for potential short opportunities.

The speaker stresses the importance of remaining patient and selective in the current market environment.

The speaker invites listeners to share their watch lists and strategies in the comments.

An invitation to a free online presentation about becoming an in-house or remote trader with SMB Capital.

SMB Capital is described as a top proprietary trading firm looking to hire and develop trading talent.

The firm allows traders to use its capital to trade without risking their own money.

SMB Capital has a rigorous training program to mold profitable traders.

Three simple criteria can earn anyone an interview with SMB Capital.

The speaker encourages ambitious and determined traders to sign up for the presentation.