The Chart Book
Welcome to the weekly recap – hope everyone enjoyed the volatility this week and was profitable! Before we get into last weeks ideas, we want to take some time to share a few thoughts around discipline. On your journey to becoming a successful trader, it is crucial that you develop a disciplined mindset, beginning with a defined system or methodology behind each trade (essentially a “Why” for every trade). We believe there are three key components to developing this mindset:
Keep a narrow focus – Narrow down the stocks/forex charts you want to focus on for the week/month. Trading only a few instruments at any given time will allow you the focus needed to more effectively manage each position.
Have a plan for each trade and STICK to it as best as possible – Don’t add to a losing position if you didn’t plan for it and don’t underestimate the importance of trade management (tightening stops, moving to break even, hedging etc….). Know when you are getting in and when you are getting out of a trade before you get into it.
No FOMO – Train your brain to eliminate the Fear of Missing Out! There are lots of opportunities out there and if you haven’t planned for the trade, don’t let the noise draw you into it. Focus on what you HAVE planned for – your emotions will be much more controlled.
Sounds simple right? We assure you it’s not. We are fighting our own human emotions and it can be challenging. It takes time and practice to harness our feelings and remain in control of our decisions as we trade. If you’re taking the time to plan your trades ahead of time, I can assure you your trades will be better, your emotions more controlled and decisions more confident.
This disciplined mindset is a key component of the service we want to provide to our clients. We want to bring clarity to the chaos and help improve our clients’ ability to trade their own ideas as well.
……..back to our regularly scheduled program, here is the recap of the trade ideas we highlighted last week (please scroll down to see the commentary and charts from last week):
1. ROKU – Great trade! We said this stock had a lot of upside potential and wow did it ever! We originally shared this idea at around $61.50 and it closed the week at almost $83 (with an $86 high). That’s a heck of a move (>35%) that I hope you caught! The overall objective has been achieved and will drop ROKU from our coverage.
2. CRON – Stopped out for a fairly small loss even before earnings. Nothing else to do here – coming off the list…for now.
3. TTWO – Held up well during the market volatility and ended the week slightly higher. Earning are on Monday which is likely to get will get this stock moving again. We have achieved the first target so far and we are after the $110-$115 as previously noted.
4. ABBV – Didn’t decisively move in either direction (tested Jan lows) and so we are still on the sidelines.
5. CVNA – Was a bumpy ride out of earnings, but ultimately the technical formation produced a strong move lower as expected. Finished the week ~$6 lower (about 8%), and we should see another strong move lower and are looking for the $57 area to provide some initial support, and our first point to take some profits. Remain short, but certainly, manage the trade and your profits wisely as the week progresses.
The updated chart on CVNA is below (see bottom of this email for the chart shared last week):
New Ideas for this week – (International Paper (IP) & Uranium ETF (URA))
URA – Not the sexiest of instruments to trade, but certainly one that has a solid risk-reward. We had highlighted this chart a few months back and were able to get about an 8% move higher before reversing back down. We see this area as a solid support zone that should hold against the lows of January. An alternative stop loss is below last weeks low (depending on your risk tolerance).
IP – A stock that we have been favouring to the upside for a few months now but prices have consolidated in a fairly tight range. Still like the upside for a move into the $55 area.
LAST WEEKS CHARTS AND COMMENTARY
TTWO – Has played out exactly as forecasted thus far (8%+ higher) – achieved the first target of $100. Looking for $110+ if the uptrend continues.
Still bullish, but pullbacks to $94-$96.50 area are certainly possible and present an opportunity to add/re-enter the trade. Original and updated charts below:
ROKU – With earnings coming up next week (on the 8th), this stock has the potential for a sustained move higher. The original chart is posted below, prices have moved higher by about 6% (now trading at around $64.70). Profit taking into earnings is the right move but would want to be in this trade for the earnings as well. The highlighted zone below is still the line in the sand.
CRON (Marijuana stock) – Prices haven’t done much since our last update (original chart below) – still looking for a move “higher” (see what I did there?) Anyway, bad jokes aside, will look at $15.20 as a stop loss for anyone who’s long….which makes for a solid risk/reward. Targets are open for now.
ABBV – We’ve been PATIENTLY watching this stock for weeks now – a break of recent lows or a break of $81.80 to the upside both should produce strong moves both long and short. Our bias is bullish (as the potential for a bigger move is to the upside), but will let price action get us into either trade.
CVNA – I could say a lot about the issues we see with this company and its parabolic move recently, but price action is king and it’s been on a tear! Earnings are coming up next week and so the catalyst is there for a sharp move lower. This idea would best be executed through the options vs an outright sell.