If you weren’t in the room yesterday during my LIVE 9:30 a.m. ET trading session, things got a little… weird.

I essentially woke up already checked out from the stock market, and as much as I love day trading the VWAP, sometimes you just have to take a step back and reflect. (And maybe belt a few Tarzan calls.)

However, while I wasn’t my usual energetic self, that doesn’t mean I deprived my fellow VWAPians of my wisdom – I would never.

So today, I’d like to break down 5 Knowledge Bombs from Monday’s session, including:

  1. When to take an off day
  2. What could happen to stocks in September and October
  3. Where to regularly sink 10% of your trading profits
  4. And two more…

Plus, mark your calendars for 3:30 p.m. ET this Thursday, Sept. 1, because your favorite Trading Odd Couple is back by popular demand, baby!

That’s right, I’ll once again be TRADING THE CLOSE LIVE with my good buddy and polar opposite – the legendary “Bad Boy of Options” and smartest guy in the room… Mark Sebastian!

Keep an eye on your inbox for more details, and in the meantime, catch us both right here at 8:30 a.m. ET on Money Morning LIVE, just before my usual 9:30 a.m. ET trading hour.

When to Take a Day Off

Listen. You usually have to be in the right mindset to trade successfully and profitably, so going into the day anxious or despondent probably means you need a day off.

Not being focused on the right things can lead to mistakes and slip-ups in your trade plans or executions, and you’re more likely to be distracted and miss one of your exits along the way.

I’d rather be cash than trading for the sake of trading.

So when I woke up yesterday with another Groundhog’s Day feeling, I felt the need to just take a beat and look at the bigger picture…

Which leads me to the next lesson:

The Market Never Goes Down

I almost lost everything on a massive short position in 2012. And then it dawned on me.

I said to myself, “What are you doing, fighting a government-run stock market? It’s never gonna go down again. Stop it with the big shorts.”

See, the federal government took over the markets back in 2009 to save us from the Great Recession. Since then, the stock market hasn’t been based in – well, reality, for lack of a better word.

And sure, you can call me a conspiracy theorist, and that’s fair – but unlike my delusional cousin, my conspiracy theories are based on the facts.

Think about it – this market has survived everything the world has thrown at it:

  1. Wars? Check.
  2. Political unrest? Check.
  3. Pandemic? Check.

I mean, the SPY has doubled since the coronavirus lows in early 2020. DOUBLED, BLANCHE.

Weekly chart of SPY – courtesy of StockCharts.com

Which means…

Does Seasonality Even Matter?

A lot of extremely intelligent quantitative analysts out there are talking about seasonal weakness on the horizon, because the September-October period is supposed to be notoriously ugly for stock traders.

However, while there’s likely some historical data to back that up, does it even matter to VWAP day traders like me?

No, not really.

That’s because I prefer to REACT to stocks’ 1-minute VWAP with nimble long or short positions, and being so buried in the minutiae, the macro stuff really doesn’t matter too much.

Plus, I can make money playing VWAP no matter the market environment.

And as for historical data, since the Illuminati (or whatever you want to call the “them“) took over the markets in 2009, guess what?

One exchange-traded fund (ETF) has actually BEAT OUT the SPY in the months of September and October. Can you guess which one?

QQQ vs SPY since 2009 by month – courtesy of StockCharts.com

Sink 10% of Your VWAP Profits Into QQQ

If you guessed the Invesco QQQ Trust (QQQ), congratulations, you know me well.

Per the image above, the Qs actually outperformed the SPY more than half the time over both months since 2009.

Anyone who has watched my LIVE 9:30 a.m. ET trading hour knows that my favorite trade of all time is either buying QQQ shares or QQQ call options when the shares break back above their 1-minute VWAP.

It’s been about the most consistent trade of my career.

If anyone is in the QQQs, they’re usually getting paid, whether they bought two months ago, two years ago, or two minutes ago – the ETF continues to assail new heights.

That’s why it’s not a bad idea to take 10% of the profits you make on your VWAP day trades and play it on the QQQ breaking back above the VWAP.

Plus, it’s instant diversification, because it accounts for some of the best stocks on the planet.

Of course, there ARE ways to LOSE money in the markets, and one of the biggest is not nailing your VWAP timing.

Beware the Bucking Broncos

When you’re day trading VWAP, timing is everything.

On the entry side, you not only want to wait for definitive VWAP breaks, you want to wait for the initial choppiness of the session to play out.

I advise waiting out the first 15 minutes.

For instance, Gambling.com (GAMB) on Monday shook out quite a few early birds on the initial chop. Had they simply waited about 25 minutes into the session, they would’ve seen that upside VWAP break I love so much.

GAMB was nuts to start the week

And on the exit side, you gotta be aware of the Pump & Dumps – they can shake you out of even a market that never goes down.

The harder and faster a stock skyrockets, the harder and faster it can fall, so make sure you’re setting stops and profit targets along the way, never exiting your entire position at one price.

And make sure you’re watching those whole and half numbers, along with the VWAP.

In closing, don’t be afraid to take a mental health break from trading when necessary – and when you do get back into the game, trade the VWAP wisely.

Now, stop reading and join me in the room as I trade LIVE from 9:30 to 10:30 a.m. ET, and then keep an eye on your inbox for more details on my special TRADE THE CLOSE hour with Mark Sebastian this Thursday at 3:30 p.m.!

Kenny “The Warlock” Glick


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