The Chart Book: Great Trade Last Week on Humana…the Market Continues to Grind Higher (as We Expected) and a New Trade For This Week…
Our newest trade Humana (HUM) led the way this week after a 10% move higher!
Last week we said, “We are looking to add long exposure as we eye the 3,100 area in the S&P 500” – so far that forecast is playing out as expected. While we continue to be bullish the overall market, we need to be on the lookout for a potential reversal based on a potential wave count we are tracking.
As a trader, it’s best to have alternate scenarios thought out in advance….the critical level is likely to come in the 3,100 – 3,150 area in the S&P. If we get to these levels we will be watching things closely (and likely treading lightly) or at the very least looking to add short exposure.
This week, I want to talk about our Square (SQ) recommendation – we didn’t get into this trade as we were looking for a pullback and we missed our entry by a measly $1; Square has since shot up by 18%! Sure, it would have been great to be in that trade and it provides an opportunity to share our mentality around missed trades:
- As a trader, a crappy short term memory is to your advantage. The bad trades and the opportunities missed are best to be forgotten…quickly! Same for the good trades as well. They have no bearing on your next trade and if you deviate from your overall strategy/trading plan and focus on “what could have been”, you’re very likely to make poor trading decisions.
- Fighting for solid risk/reward trades is very important. Being able to maximize your profit and loss per trade can really add up quickly! It’s the only way to keep your losses small and winners big. Remember, there are lots of opportunities, so why not fight for every percentage point, pip, dollar etc. Take the mindset “on to the next…” regardless of the outcome. Stick to your plan and see the results!
We are going to manage a lot of our positions this week, so buckle up! We’ve also got a new trade to cover in NetEase (NTES), so let’s get right into it…
NOTE: If you’d like to see the previous Chartbook reports, they can be found on our site: https://www.aspentrading.com/blog/
Running total of our closed positions: (net % moves of the stock)
- ROKU – Gain of 35%
- CRON – Loss of 8%
- TTWO – Gain of 15% (1/2 size @ 8% & 1/2 size @ 21%)
- CVNA – Gain of 11% (1/2 @ 17% & 1/2 @ 5%)
- ABBV – Loss of 7%
- AMZN – Gain of 4% (1/2 @ 2% & 1/2 @ 6%)
- CTXS – Loss of 3%
- TLRY – Gain of 23% (1/2 @ 23%)
- NKE – Nil (Break-even)
- HUM – Gain of 9% (1/2 @ 9%)
1. URA (Long from $11.60) – Trading at $11.91 (up ~2.5%) – While the chart still looks fine, our capital is better deployed elsewhere – let’s exit the full position while we are still profitable.
2. IP (Long from $44) – Trading at $42.80 (down ~3%) – Keep stops at $40.70 (~7% risk). This position is doing nothing for us as it chops around, let’s continue to hold for at least another week. Profit targets open for now and will look to establish targets if/when we get above $50.
3. BAC (Long from $28.40) – Trading $29.38 (up ~3.5%). We are putting this stock on a very short leash – move stops to break even at $28.40. Profit levels still open.
4. TLRY (Long from $39) – Trading at $43.35 (up ~11%) – Keeping stops above our entry at $40. Final take profit level open.
5. TWTR (Long from $36.29) – Trading at $37.84 (up ~4.5%) – This position is doing well and looking better after last week. – continue to hold. Stops at $33.50 (~7% risk). Exit half position at $43.
6. HUM (Long from $263.22) – Trading at $291.25 (up ~10%) – A fantastic trade last week and we were able to take half profits at our $286 target. As always, stops move to breakeven and our final take profit position remains open for now (eyeing $301 right now as the potential exit). Stay long!
New ideas/pending orders for this week – Spotify (SPOT), Netflix (NFLX) – New trade, NetEase (NTES)
SQ – Missed our entry price – Coming off the list.
SPOT – Looking to buy @ $137 with stops at $119.50. First profit level at $167.
NFLX – Buying a HALF position at $322 – stops at $260 for now (~10% risk based on the half position size) and profit levels open.
NTES – Looking to buy on strength @ $265.20 with a $241.50 stop (~9% of risk). Looking for $320 to exit half the trade. Move stops to breakeven if we hit $280. (Chart below).
There is a bearish count that we are tracking as well (which we cannot ignore) – hence moving our stops to B/E $280 is the way we want to play this. Need to be vigilant in the early goings of this trade but the upside potential is too large to ignore.
(Note – earnings scheduled to be released in 3-4 weeks)
If you’d like to see the previous Weekly Chart Book Updates, they can be found here: https://www.aspentrading.com/chart-books/
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