The market has dumbfounded me lately.
And if you know me, that’s pretty hard to do, Blanche.
Every dip has been a buy.
That’s why I hate bull markets — you sell a stock and it’s up 18 points the next day!
The worst-case scenario is that it’s going up without you. But hey — there will always be another trade!
I’ve recently been getting a lot of members of my Warlock’s World asking how I conjure up my Warlock’s Watchlist every day.
First, I start EVERY DAY on Money Morning LIVE right here from 8:30 to 9:30 a.m. ET, where I go over my watchlist before the market opens.
Then I dance into my Warlock’s World and TEACH how to VWAP trade my watchlist from 9:30 to 11 a.m. ET.
And today I’ll be LIVE trading VWAP in the BIG ROOM from 1 to 1:30 p.m ET right here.
But Kenny, the watchlist, how do you choose the stocks on there?
What does the V in VWAP stand for? VOLUME.
When I’m scouring the over 8,000 stocks out there, I’m looking for VOLUME.
Liquid and volatile stocks not only have narrow bid/ask spreads, but they allow for the lightning-quick entries and exits that are at the heart of VWAP trading.
Let me say it again, we need volume.
That’s why stocks that report earnings are ALWAYS in play.
Stocks reporting earnings offer great opportunities for 1-minute Multiday VWAP reversals because earnings reports bring in higher-than-normal VOLUME.
So when I’m building my watchlist, right off the bat I’m looking at which companies are reporting earnings.
Earnings have a season every three months, since companies are reporting quarterly figures, and the avalanche of corporate reports typically starts with the big banks. The next round of reports should start trickling in around early to mid-January.
But what do we do when we are outside of “earnings season”?
Stocks always have catalysts, usually some kind of news that can drive VOLUME and PRICE.
If you’ve been with me in my Warlock’s World, you know how little I care for CNBC.
But, in the morning before the market opens, these jokers do talk about stocks that are moving for one reason or another, and I keep a (typically muted) eye on the tickers scrolling across the screen.
There’s also plenty of pre-market screeners available online that will list stocks making the biggest moves before the bell… stocks that I could trade at the open in my Warlock’s World room.
So you have your stocks moving on earnings and your stocks moving on catalysts.
Where else might I find fodder for my daily Warlock’s Watchlist?
Well, whenever I CRUSH a VWAP trade on a stock, I add it to my Rolling Watchlist.
That’s because I’ll keep coming back to a trade if it works.
So here’s a basis for building a watchlist around VWAP EVERY DAY:
- Stocks that report earnings.
- Stocks that have catalysts.
- Stocks I’ve traded before that offer a chance to revisit.
In fact, that last point reminded me of a couple of trades I recently had on Coupa Software (COUP)…
How One Stock Changed My Day from Boring to Awesome
Recently, the market gapped up significantly.
Because the markets NEVER go down.
And if they do go down, it’s short lived.
I tend to lean pretty bearishly, believe it or not. And as a bear, when I see these monster gap-up days with no selling, I check out.
As the GREATEST trader in the universe, I’ve learned that winning isn’t just making money.
Avoiding losses is a win.
So on Tuesday, I sat back and I waited.
But then, one of the stocks that was on my watchlist, Coupa Software (COUP), caught my attention.
I have no idea what the company does. The stock is probably WORTHLESS.
What I do know is that COUP was on my watchlist because the company had reported earnings, so it would probably have VOLUME.
COUP was on my radar, and I found my moment to pounce. I rode an upside VWAP break from $170 and sold into the move at $177.50.
When I checked on COUP a few minutes later, the stock had run all the way up to $186! I hate leaving money on the table.
The look on my face says it all.
I’m not that disappointed. It was still a winning trade. But… I left money on the table.
Now, I had spent the morning mostly watching. Like I said, with the market gapped up earky, I was checked out.
It was boring.
On days where you find it boring and you’ve done a positive trade in one name, these are the days where you stick to that one name because you are in the ebb and flow of that stock.
So I went BACK to COUP.
And it COMPLETELY changed my outlook on the first trade.
While revisiting COUP, it triple-topped at $186, then pulled back.
I went back to the well for the VWAP reversal.
When I noticed that COUP was making its way SOUTH to VWAP, my first thought was 1-minute Multiday VWAP reversal.
My bread and butter. Old Reliable.
COUP shuffled around VWAP for a few minutes, and when it broke down at $177.91, I entered a short position, with my stop at the VWAP.
Then COUP fed my ego even more by moving blue line to orange line. YES!
I was able to short to $172.64, more than making up for the missed points on the upside trade.
And just like that, one stock changed my day from boring to AWESOME.
I know I’ve mentioned how winning stocks are always primed for a revisit, but this is a GREAT example of how being in the ebb and flow of one stock can make your whole day.
It’s also a great example of a stock that I had never heard of, that I put on my watchlist because it reported earnings, and now it will move to my Rolling Watchlist.
Now I can’t WAIT for the next time COUP is primed for a VWAP trade because I know I won’t miss it, Blanche.
This is why I’m the BEST. Because I TEACH you not only how to trade VWAP, but to find your own VWAP trades on both the long AND short sides.
Almost every day, VWAPians are sharing their VWAP trade ideas in my Warlock’s World and I couldn’t be prouder.
Best of luck in your trading!
Kenny “The Warlock” Glick