The Chart Book: +17% in CVNA, Is NAV The Next Big Trade?

We closed half of CVNA last week for a solid 17% profit and went short on Amazon (missing our ideal entry by less than $2).  We also alerted readers of another move lower in the S&P, and while we are not looking for a market meltdown at this stage, it’s always important to know where prices COULD fall to in the context of this correction.  $2,720-2,730 is the next support level that we see.  This area could produce a decent bounce and allow for a bit of a breather – we will be watching for a reaction in that area. 

The thought that we’d like to leave you with this week is the power of Technical Analysis (namely Elliott Wave) and why having a team like Aspen Trading Group in your corner is so critical…I’ll cover my thoughts in a few bullets:

  • Knowing in advance the high probability support and resistance zones eliminate the panic or greed emotions that traders sometimes face.
  • Having a view of the overall wave count puts short and medium-term moves into perspective – If you have an outlook for a larger trend, then the movements (no matter how fast they happen) allow you to think clearly and act on opportunities as opposed to reacting to the market.
  • The biggest pitfall for retail traders is taking in all the noise that’s out there – the media, some headline for a specific stock, a Tweet from you know who!  etc…To be an effective trader, you NEED perspective and context; you need to be able to keep your emotions in check.

It’s not always about trades like ROKU and CVNA, it’s about developing your approach to the market and your mindset as an investor. The markets will evoke all kinds of emotions in traders, the key to long term success is managing those emotions with well thought-out analysis in advance. As always, feel free to drop us a line at service@aspentrading.com with any questions, advice or assistance you may need.

Let’s get into our open positions and new ideas for the week…

NOTE: If you’d like to see the previous Chart Book reports, they can be found on our site: https://www.aspentrading.com/blog/

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Running total of our closed positions: (net % moves of the stock)

 

1. ROKU – Gain of 35%
2. CRON – Loss of 8%
3. TTWO – Gain of 8% (1/2 position) 
4. CVNA –  Gain of 17%(1/2 position)

Open Positions:

1. TTWO (Long from $93) –  Adjusted stops on our remaining position to $97.50 ($4.50 profit).  Maintain long positions, targeting $113 in the short term.  

2. ABBV (Long from $81) – After weeks of watching, we finally have a position on this stock.  We went long at $81 and are currently sitting at $77.  Stops at $75.50 – that’s about a 7% risk. 

3. CVNA (Short from $72) – Currently trading at $57.60, we got out half of our position early last week (at around $59.50) for a solid gain.  Maintain shorts on the remaining half of the position.  We are targeting the $44-$47 zone.  Stops at $70.  

4. URA (Long from $11.60) –  Nothing to add here, staying long with $10.95 stops (~6% risk).  Still looking to trade above $11.70 to create some momentum higher.

5. IP (Long from $44) – Currently at $41.60.  Maintaining longs for now. Stops at $37.40 (~15% risk).  

6. BAC (Long from $28.40) – Trading $26.50 – continue to hold.

7. CTXS (Short from $96) – Prices have moved slightly in our favor at $64. Hold.

8. AMZN (Short from $1,790) – Unfortunately, we missed our ideal entry zone at $1,851 by only $2!  Our downside entry was a break of $1,803 and the market gapped through that zone, so most short positions were likely established around $1,790.  Let’s manage this one very tight – move your stops to break-even and look to exit half of your position at $1,756.  $1,680 is the second zone we are eyeing.  (Updated chart below)

 

Amazon Chart

$1,680 is the second zone we are eyeing for AMZ

 

New Idea for This Week – Navistar (NAV)

NAV – A compelling set-up to the upside as we can clearly count 5 waves up and 3 waves down. Of course, trading is hardly ever that simple as chart formations can change while the overall trend remains intact. Given our slightly cautious view of the market, this stock is one we will have on our radar to get long. Earnings are scheduled for this week and while we run the risk of missing a move, we believe opportunities will still present themselves. Expect an update on this stock later this week and if not, we will certainly cover it in next weeks edition of the Chart Book.

Clear five wave move up and 3 wave correction complete

Set-up to the Upside for NAV

If you’d like to see the previous Weekly Chart Book Updates, they can be found on our site: https://www.aspentrading.com/chart-books/ 

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