Hey there VWAPians,
I’ll be back at it this week with all my buddies on Money Morning LIVE at 8:30 a.m. ET every day, followed by a full hour of just me and my beautiful face starting at 9:30 – all right here.
But first… what’s the first rule about trading the Qs?
Come on, you know it… Never Short The Qs!
Well there’s a time and place for everything.
And today, I’m happy to bring you a trade that breaks all the rules.
It all went down LIVE last Friday when I… dare I even say it? Shorted the Qs.
I would NEVER take that lightly, so you know there was a good reason behind it.
Today I’m going to talk about what had me chomping at the bit to take the Qs down… and how I exited the position to leave room for more profits.
It all went down LIVE, so don’t miss today’s LIVE action at 9:30 a.m. ET, right here.
HOW TO CRUSH THE Qs, ONE STEP AT A TIME
If you took a quick glance at the chart below, no way you would think it’s the Qs.
After all, the market never goes down.
Well, sometimes it does… Blanche!
But it gets better.
The red line way up at the top of the chart?
That’s where I alerted a short trade on the Qs.
You probably did a double take when I said it because there’s no way I could possibly be telling you to short the Qs.
Someone else maybe, but not me.
But it was no joke my friends.
I would NEVER joke about shorting the Qs.
I even had to point that out in chat Friday, just to be sure everyone knew how serious I was about this.
WHY I BROKE THE RULES
There have been a few signs creeping up lately.
It really comes down to the market showing some weakness on the close a few days in a row last week…
And of course… I’m not shorting the Qs unless the UVXY is heading up.
But I’m not leaving you with just that.
I’m going to get into the nitty gritty of the intraday chart itself too.
It happened fast. So fast, in fact, that I was talking about another stock when it happened… I got the alert to short the Qs.
What specifically was I alerted to?
Right here… the Qs broke below the VWAP bouncing at 381.34, just above the premarket highs of 381.31.
After retesting the VWAP, the Qs moved back down breaking below VWAP and the premarket levels thus alerting me to take a short position… which I did at 381.30.
And just under that level was the opening price of 381.23, which took the Qs red on the day.
I jumped on this trade with 300 shares short at 381.30.
But as you know, shorting the Qs isn’t something I take lightly.
I would LOVE nothing more than to crush them to the downside every day… but I’ve learned my lesson (hint: The Market Never Goes Down).
So I tread lightly, and in this case I layered my stops at 381.33, 381.43, and 381.55.
Luckily, my stops never came into play.
But my targets did.
I took the first 100 off at 380.88, a significant level from the premarket.
The Multi Day VWAP (a blue line to orange line move), where I took another 100 off at 380.50.
Now that I’ve locked in some profits, I have one more trick up my sleeve.
I’m going to let the last 100 shares ride.
This is my “I don’t give a sh*t position.”
Why? Because we are short the Qs, and You Only Live Once.
But seriously, at this point I’ve locked in a gain on ⅔ of my position and I’ve moved my stop to 380.85 to lock in the last 100 if it starts to head back up.
By moving my stop and letting the last 100 ride, I’m giving myself a chance at a big move if the Qs really rolls over here.
You know the Knowledge Bomb…
And moves like this are exactly why I never cover my whole position at one price.
You win some, you lose some.
And this time I can say it… winner winner chicken dinner. I shorted the Qs and I won.
For one last shout out to myself…
On Thursday I mentioned 378.45 being a major level to watch… and if you look at what happened at the end of the day Friday.
When the Qs broke below 378.45, they ripped down another 2pts – in a hurry.
I’ve been doing this for decades, and I’m not going anywhere.
So don’t miss another day of LIVE trading with The Warlock, right here at 9:30 a.m. ET.
Catch my current watchlist at the top of the page, and don’t forget to check out the earnings calendars to get a glimpse of stocks that could become the next earnings reversal fade.
Kenny “The Warlock” Glick
September 13 2021