We recently had a market roll over which can provide many great shorting opportunities. A lot of people assume they can only go long. But when this type of dump happens, you can have bigger gains because the range expands. Remember, stocks take the stairs to go up and the elevator to come down.
SHOP
SHOP was breaking support the last couple of days. Yesterday it had a great bounce because it never broke its 9 EMA. So today when it started to roll over and break under its 50 SMA, that’s a sign that its re-breaking. We took multiple trades on this, with the thesis that on the bigger picture SHOP was ready to go. All we needed to do was align our intraday setups to really nail this thing down.
I traded 2 setups with SHOP that worked out well. In the morning you can see this huge push down so I waited for a bounce. When it remounts some support I waited to short it. As it popped into its 20 EMA, and remounted the VWAP I shorted it a few hundred shares. I shorted 300 at $87 and covered 100 every time it flushed.
When I’m trading well, I’ll typically hit a stock 4 to 5 times to elongate my gains. It’s not about going all in, but trading around a core position. So once it popped again. I shorted at the 9EMA but ended up covering it flat. When it started to go up, rather than getting frustrated, I got excited. I got out for a small loss but if it starts to pop, I’m going to be able to get more reward because I would be able to short it higher. A lot of people take a small loss and get frustrated. But if I have an overall thesis, I know that I’m going to end positive at the end of the trade.
Once it popped into the VWAP midday, I shorted it as it once again moved back under with a stop above the recent pivot high. Then it just broke down, allowing me to cover into the flush. A stock like SHOP has incredible range, so only shorting 300 shares can give you some massive gains.
