Fear is the Mind Killer
Fun time is over, kids! You and your cousin are going broke!
Unless, of course, you’re like me and trade VWAP.
This bull market keeps wanting to reach a tipping point, but the government keeps stepping in to the rescue.
Well, when (not if) this market does finally go down, we’ll be laughing about it.
I love when the analysts are wrong. This is the moment when technical analysis and VWAP reign supreme.
Catch me reigning supreme EVERY DAY on Money Morning LIVE from 8:30 to 9:30 a.m. ET RIGHT HERE.
Then I jump to my Warlock’s World where I tumble down the rabbit role of endless VWAP possibilities.
When I say endless possibilities, I mean it. EVERY stock has a VWAP story.
Be sure to join me today at 1 p.m. in the BIG ROOM where Uncle Warlock will tell more VWAP stories.
Right side of VWAP, right side of life, pal.
So, wrong side of VWAP… well…
Tuesday was a special day.
While the market was taking a big ‘ol DUMP, my fellow VWAPians and I were dancing to the beat of our own drum.
A winning beat from a golden drum.
But it hasn’t always been that way for me.
I’m honest — I’ve taken some pretty bad beats… most of which came before I was introduced to VWAP and found my trading rhythm.
That’s why I’m teaching YOU how to survive based on all the bad beats I’ve taken.
You see, VWAP trading is MORE than just alerts or stock picks.
It’s not just some system with arbitrary gobbledy gook all over your charts.
It’s PRICE. VOLUME. VWAP. And ME.
Throw in a little fear, a little greed, and welcome to the Warlock’s World, Blanche.
So even though I had winning VWAP trades on stocks like AMC (AMC) and Robinhood (HOOD) yesterday, it was something on the Qs that I REALLY wanted to talk about… something that YOU should know and could save your ass in the future…
The Qs are probably my favorite stock ever.
By “the Qs,” of course, I mean the Invesco QQQ Trust (QQQ). This exchange-traded fund (ETF) is made up of the top 100 tech companies. It basically IS the market.
I have a whole set of rules based just around trading the Qs… it could probably be its own separate service!
But because I’m such a kind, benevolent Warlock, I trade QQQ in my Warlock’s World.
One of my rules that I tend to break is never short the Qs.
I will short the Qs if I’m seeing certain signals in the market.
Well on Tuesday morning, I was breaking the rules and I was short the Qs in the pre-market.
Everyone knows by now that the opening candle can be a doozy. A real face-melter.
But what I saw was something different that my VWAPians NEED to know.
What the hell is a capitulation candle?
The first candle in the unshaded part of the image above (with low of the day marking) is one of these types of candles.
When the same candle breaks a new low and then goes back above where it broke down from, that’s a capitulation candle.
Capitulation could be signs of a reversal.
When this happened, I immediately closed my short position on the Qs.
I did this for a couple of reasons:
- To protect my profits on my short position
- To position myself for a potential reversal the opposite way (to the upside)
This is one of the main benefits of living the nimble, day-trading, VWAPian life.
I’m not about to sit idly by and watch the market take my money.
Even if I had kept my short position on, I had NO fear.
Why? Because I STAY DISCIPLINED.
If you’ve joined me in my Warlock’s World, you know that every VWAP trade is defined.
What I mean by “defined” is that I enter my trades with my stop marked on my chart, telling me where to exit the trade if it doesn’t go my way.
I also enter my trades with target exit prices for when the trade does go my way (which is usually what happens).
So I have my entry price, I have my target, and I have my stop. Each trade is clearly defined, which eliminates any fear.
I parse the market and my trades into “If/then” statements.
IF the stock goes here, THEN I do this. IF the stock goes there, THEN I do that.
By staying rules-based and knowing my target and stops, most of the emotion and fear and greed are removed from every trade.
So when I saw that QQQ capitulation candle, it triggered one of my internal “if/then” statements that I’ve spent DECADES developing, and I acted accordingly.
And that’s the type of education that you can’t get from alerts or stock picks.
That’s the type of education you can ONLY get from the Warlock.
That’s all for now, VWAPians, but don’t forget to come celebrate my greatness today in the big room RIGHT HERE at 1 p.m.
Kenny “The Warlock” Glick
December 15 2021
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