Hey there, fellow VWAP nerds!
What a morning, am I right?
If you watched me trade LIVE during the opening hour, you witnessed some special Warlock magic on stocks like Advanced Micro Devices (AMD), Ever-Glory International (EVK), and Dolphin Entertainment (DLPN), not to mention my favorite trade EVER – the Invesco QQQ Trust (QQQ).
Making money & having fun – nothing better
But you know what?
It wasn’t Warlock magic at all, Blanche.
Because Volume-Weighted Average Price is the language of the Matrix.
Remember the deafening screech of dial-up internet? That’s what VWAP talking to the computers sounds like.
Trying to deny the power of the VWAP is fruitless and harmful to your bottom line – trust me, I found that out the hard way.
Knowledge Bomb of the Day: Lessons Not Learned in Blood Are Easily Forgotten
I’ve been in the trading game for about three decades now, and actually started as a stand-up comedian who got plucked by a broker in the audience.
Like many of you just starting out, I didn’t have insider knowledge into the way the markets work – I was totally naive and gave a lot of “experts” like Goldman Sachs too much credit.
I tried trading the gamut of indicators – moving averages, Bollinger Bands, relative strength measures… You name it, I tried it.
Or, to be more specific, I tried it and lost a lot of money on it.
The blood of Kenny Glick spilled into the sewers of Wall Street.
Okay, okay – so I didn’t LITERALLY spill blood, but some days it sure felt like it!
And then, ladies and gents, I discovered the power of the VWAP.
My account started going in the right direction, and I never looked back.
Because – and write this down – Lessons not learned in blood are easily forgotten!
But I’m not asking you to spill blood, people, because like a sacrificial lamb, I did that for you.
And now, my mission is to prevent others from making the same trading mistakes I once made; I want to bring EVERYONE into the VWAP light and explain how this indicator can validate which side of the trade you should be on.
Take AMD, for example.
A while back, I told you stocks that break $80 usually get to $100, due to the magnetism around round numbers… and if AMD broke the century mark, we could see those $2.50-price increments come into play, with it topping $102.50, then $105, then $107.50…
And this morning in pre-market trading, we saw that $107.50 marker – not $106.83 or $107.12, but $107.50 – turn into a hurdle.
AMD 1-minute chart (pre-market is shaded) – courtesy of Thinkorswim (ToS)
I told you around the open that AMD rolling over through the 1-minute VWAP (blue line), then the multiday VWAP (dashed orange/yellow line), and then its pre-market lows, meant that the SELLERS were now in control of the greatest stock on earth.
I drew a line at $106.30 on my AMD chart, which was a level that held in the pre-market, and I noted a potential double-top area at $107.14.
But remember – If you’re SHORTING stocks, don’t stay short for LONG (pun intended)!
I have to take profits along the way, and remain nimble in my positions, because what was a successful bearish trade can turn into a bullish trade with a quickness, like we saw with AMD.
And when DON’T you want to be on the short side of a trade?
WHEN THE STOCK IS BREAKING BACK ABOVE THE 1-MINUTE VWAP.
1-minute chart of AMD just before 10 a.m. ET
That’s because VWAP. Doesn’t. Lie.
CNBC lies, and so does Goldman Sachs (let’s hear it again for the analysts who downgraded AMD as a penny stock!), but VWAP is the truth.
BIG CAP J is a chat legend for good reason
See, when you’re in my world, you treat the market like a casino, and VWAP is the language of the slot machines.
A lot of algorithms are based on VWAP, so the stock’s relationship with this trendline can often tell you what’s going to happen next – and which side you should be on at that moment in time.
Still aren’t convinced?
Check out EVK, which emerged on my radar this morning amidst some crazy volume.
When I saw the stock breaking back above the 1-minute VWAP following the classic “buttcrack” pattern below it, my ears perked up…
And wouldja look what happened:
1-minute chart of EVK
The shares went on to take out their pre-market highs and were ultimately halted, and my profits meant I was free to keep trading, watch “The Price is Right,” or start day drinking if I wanted to.
The world was my oyster, and all due to VWAP.
Bunch of drunks in the chat room! My people.
And do I even need to get into the killer DLPN trade from this morning?
No – because every day is the same with VWAP, it’s just different numbers and letters.
So, ladies and gentlemen, if today wasn’t “proof” that VWAP is the holy grail of day trading – well, I guess my blood was shed for nothing, and you should continue doing whatever it is you’re doing.
How’s that working for ya, by the way?
Will we find another trifecta like AMD, EVK, and DLPN? I guess we’ll find out…
Kenny “The Warlock” Glick
3 responses to “Goldman Lies. VWAP Doesn’t.”
August 02 2021