Friday, January 5, 2018

The Calm Before the Storm

Hey folks,

I wanted to start the 2018 year writing about a setup in OSTK I mentioned on twitter earlier this week...

Now, when you first look at the chart of OSTK, surely some of you will be scratching your heads saying "what the hell did he like so much about this one?"

So, today I'm going to discuss "the calm before the storm" ....

First of all, a fellow ART OF TRADING member ( @GaelicAidan )  emailed me and asked for a 'Chart Request' for OSTK....



I did a chart analysis on it and here's the OSTK chart I tweeted out on Tuesday morning, both to Art of Trading members and on my @TraderStewie public twitter stream !


There was a lot to like about this setup if you knew what you were looking at and that's exactly I intend to do today, to TEACH YOU how you can spot some of these powerful setups BEFORE they start rampaging and catch them while they are still "sleeping" so you can buy them during the "calm" phase and reap the rewards during the "storm" phase!


Here's the exact OSTK chart I sent out to AoT members and also my twitter followers on that Tuesday morning.... 

Notice how OSTK, which is a stock I've come to know quite well over the last few weeks since it's been a fun stock to trade with that big surge in momentum in Q3 2017 .... Also, important to note, that OSTK has over 50% short interest!! That's just INSANE to think that more than half of the shares outstanding are sitting in SHORT POSITIONS!

This stock has SHORT SQUEEZE written all over it!




Notice how OSTK has made several BIG dramatic run ups lately and a couple of times, OSTK make equally as dramatic pullbacks too! This stock is definitely NOT a "slow mover" and it is definitely NOT for the faint of heart... OSTK is a trader's dream IF you play it right.

Watch OSTK chart closely in the first 2 weeks of December, made a gigantic run up from $42 to $82! It basically doubled in 2 weeks! Now, keep in mind we are not talking about a penny stock here!!

Now, watch the OSTK chart very closely and you'll see that after topping out in mid December, it made a big retracement from $82 to $56.... then it tried to make a bounce/attempt for a couple of days before "faltering" for a few days.... NOW, those "faltering" days are the KEY to this setup....
The stock deceptively put many traders to "sleep" as it basically went into a 4-5 day "coma". The stock literally went to sleep the last 4-5 days and most traders on twitter whom I follow stopped talking about OSTK(usually a sign, traders have moved on to other names which are more active)....
But, I've seen this way too many times and know fully well, stocks with huge short interest like OSTK do not stay "quiet" for too long before they start getting rowdy and wild again!

.....in other words....

..............IT'S THE CALM BEFORE THE STORM .....


Here's two tweets I sent out on Wednesday to AoT members and also on public twitter.



Here's what OSTK chart was doing on the intra charts..... note, the "small liftoff" candle at around 12;50PM that broke out of that mini intra-day sideways consolidation.... When I saw that candle perking up, I started to feeling a better about the prospects of this setup... Felt like this stock was about ready to turn the corner for real and start something special ...




When stocks with HUGE short interest like OSTK go thru a "quiet" period for a few days(especially when they have been running HOT recently), you should know right away, that we have a "calm before the storm" scenario brewing and be READY!



Look at that EXPLOSIVE move!! This stock is in full blown ATTACK MODE! 
What ever you do, DO NOT SHORT an "angry" mover like this!
Stocks that move like this usually go on to run much much HIGHER!



And here's what OSTK looked like on the daily charts.... 

As you can clearly see in the chart below, OSTK broke thru that symmetrical triangle's $66.30 breakout area spot with NO effort what so ever....that told me, this stock is about to get really WILD! 


Trades like this OSTK are only as good as the VOLUME that pours into them, so for us to have true confidence that we have a BLOCKBUSTER trade, we need to see VOLUME! VOLUME! VOLUME! The more, the better!! .... so naturally I was watching the intra-day charts closely on OSTK with great intent .... What I wanted to see was OSTK's volume ramp up BIG TIME in the final hour and especially going into the close that day.... that told me that a fraction of the heavy short positions in that stock are surely starting to "panic cover" in droves!! "Panic covering" is a long trader's best friend! Panic covering on big volume means the stampede has only just started and likely to continue up for at least 1-2 days minimum, if not 3-4 more days!

Here's how OSTK closed on that Jan. 3rd 2018 and I made sure to tweet it out to let the traders who are still long in OSTK to hang on as more gains were likely coming the following day....


 ....Here's a post-market breakdown of what I was seeing on the INTRA-DAY charts.... 




.... OSTK, the following day .... 
Blew right past my first target of $70  


..... OSTK Chart today ..... OSTK shot up a whopping +30% in 4 days! 


So hopefully, after reading this post, you'll have a little better idea of how to spot a "sleeping giant".... and always remember when the market puts some stocks to "sleep", it's doing that PURPOSELY....
so don't fall asleep and be on the lookout for "the calm before the storm".





As many of you know by now, what I LOVE most about these sorts of big EXPLOSIVE trades(like our ROKU trade from 2 weeks ago), is the feedback I get from both Art of Trading members and also my twitter followers when I do post a setup publicly!!





Replying to  
Sold 2/3 at $71.40 for 7.40% and Just like that its my best trade this year😀


Replying to
This is indeed my First trade in AOT. I'd like to thank you for all the educational videos on youtube. They are helping me to refine my trading style!




I am @awesom_o Jan 4
I owe you on this one Stewie. Up 15% 📈👍




Steel Larson @SteelLarson 6 hours ago

Even with small position size have made more in this year than any other issue


HiddenPivots @HiddenPivots Jan 3



Michal G @michael_sopot 3 hours ago
Dear Stewie,
I am 26% up on OSTK. Thank you. I have a good wine for you: Marques de Murrieta Finca Ygay Reserva 1984.   How can I send you?




Don’t know how you do it Stewie but you just did it again! Thanks for the $1600!






Thursday, December 7, 2017

ROKU Trade : Step By Step

Hey folks,

As promised, here's the STE-BY-STEP blog post on our ROKU trade, we made at the ART OF TRADING service 2 days ago...

What I love most about this trade is it was a combination of 4 of my favorite things that i actively look for when trading:
1: Momentum Stock with HUGE short interest(short squeeze candidate).
2: An awesome lookin "Holy Grail" setup.
3: A Falling Wedge setup
4: ROKU was on the "POWER EARNINGS GAP"  watchlist.

So here we go....

ROKU is on my "POWER EARNINGS GAP"(PEG) watchlist.... Long time AOT members or twitter followers know how powerful these PEG stocks can be....

ROKU hit my scans on Nov. 8thth after it made that super sweet "Power Earnings Gap" ....



So once, a stock that EXPLODES higher like the way ROKU did, these are normally the BEGINNING of a much bugger move to come.... However, i prefer to not buy the stock on the big POWER EARNINGS GAP(PEG), I prefer to simply, be patient for a better risk/reward setup to emerge....

A few weeks later....

ROKU did eventually started what i like to call a "SMART" pullback.... A smart pullback is when a stock that been running strong on big volume, makes new high(s) and then starts a "slow and controlled" low volume pullback to a KEY support area.....

After tracking ROKU on my "PEG" watchlist for a few weeks.... Here's the setup that caught my eyes... I immediately tweeted it out to ART OF TRADING members and also on my @TraderStewie public twitter stream....


Note, how ROKU pulled back 7 days in a row on very low volume !! That fact that it pulled back 7 days in a row made this setup extremely attractive from a Risk to Reward perspective!

Also note how ROKU is holding the 20 Day Moving Average(this is a classic "HOLY GRAIL" setup!
Market was weak on the day ROKU caught my eyes, but i noticed that despite the market weakness, ROKU remained rather steadily above the 20 day MA, just sitting there and absorbing the action.... (Just like a coiled king cobra, laying low in silence, ready to ambush and attack in a BIG WAY!)

Always remember this..... From CONTRACTION comes EXPANSION! 
This is especially these highly shorted momentum stocks like ROKU...   

ROKU has a short interest of about 40%!! That's just insanely huge(in other words almost HALF the float is held in short positions!) and told me that if this stock was to reverse from RED to GREEN as it tested the 20 Day MA after a 7 day back to back pullback,then this stock was sure to EXPLODE higher as some of the folks holding short positions in this stock are surely going to cover and squeeze this bad boy in a dramatic manner!! 

As if all i mentioned above isn't a good buy signal as it is, i noticed ROKU was setting up a FALLING WEDGE pattern(my favorite trading pattern ever!).... 

Check it out! 

The setup is there for the taking.... so now it's time to start planning the trade.... 

If I go long here at $39.30 area, where's my stop loss? What position size should I take? How volatile is this stock? Does is make more sense to take a smaller size position and use a wider stop loss since this stock can be volatile? What's my holding time frame? What's my target? 

All these little calculations are going in my head in a matter of milli-seconds....  

...Confidence is SUPER HIGH, we have a killer trade on our hands...


All trade alerts are Emailed, SMSed and tweeted.

So i officially alerted ROKU for AoT members:

Long ROKU at 39.30 stop loss at 37.00 HALF SIZE target: $50 to $51


I even shared this setup on the public twitter : @TraderStewie 

and even tweeted numerous times to keep an eye on this ROKU because this stock(with this kind of short interest), once it goes from RED to GREEN, this thing is like a loaded weapon, ready to EXPLODE! 

Within a few minute, the stock started to show hints that it meant business.... It slowly started to drift, bob n weave.....

ROKU going green here.... if this bad boy closes GREEN today, watch out above since this stock has INSANELY huge short interest. Almost 40% short interest!

Replying to 
Folks, we have movement.....




GREEN ON THE SCREEN.... about to RockOut ? Almost 40% short interest in this bad boy!




Once i saw that big volume SPIKE at 2:10PM, i was very confident, ROKU has "AWAKEN" and its ready to ATTACK higher in a major way! I've seen this too many times in the past and can just "feel it" comin!

The 15 minute charts, shows how GORGEOUS that FALLING WEDGE pattern was in ROKU...
Literally, it's a "TEXT BOOK" Falling Wedge pattern....  


Once ROKU broke that Falling Wedge, i knew this stock wasn't turning back any time soon!




ROKU is now RUNNING STRONG and the momentum PLAYERS are hopping on board the moving train and the stuck shorts head for "cover".... It's a PILE ON effect at this point.... like a domino effect...



At this point, ROKU is up over +$4 in a matter of 2-3 hours of holding it! 

Here's how the stock closed on that day !!  


A thing of ABSOLUTE beauty ! 

....We kept raising stops as ROKU kept ramping higher.... 

Raise ROKU stop loss to $42.00
  
 
Raise ROKU stop loss to $43.00 We are up almost $4 on this beauty ! Keep raising those stops!
 
We stopped out ROKU the next morning at $42.90 ... Booking a cool +$3.60 or 10% gain!!

Stopped out ROKU at $42.90



The feedback from both Art Of Trading members and also my twitter followers was THE BEST part of this trade!! 



Replying to 
Longtime AOT and follower. Highly recommended. I believe he posted this idea in his public stream.

Replying to 
ROKU Options +525% :o



Replying to 
(ROKU call options)Now up 400%. Trimmed 1/4. :)


Replying to 
Bought a few Dec 45 calls. Currently +255%. Nice work Stewie!

Replying to 
Enough for me on this ROKU! Brother absolutely fantastic call!

Brilliant Call !! Keep 'em coming:)




Replying to  
Thanks for sharing! After reading your tweet, I bought Dec 40 calls. Just sold half for a double. 



Replying to 
Bud hell of a call. Thx bc I purchased $40 calls for next week 
at $1.65 earlier..near double!



Thanks Stewie ..... just bought some new Blizzard skis off the trade trade . luv you !




"Amazing timing! That could most likely be the best call you've done since I joined AoT!"

 Jesper S.J.  (AoT member)


"Stew, I made a mighty nice sum on this (ROKU)trade.  I got in soon after I emailed you and went for the ride!   Sold for a great profit.  It must be a great feeling going home for you knowing you made a nice call for a lot of people today.  Thanks and hope you have a great night!"
Mark R. (AoT member)



Lala Taylor

@LalaTaylor17 

A picture speaks better than 1000 words. Thank you for all your invaluable lessons throughout 2017, trade alert and all the other ones 🙏🏽



I hope you all found this post educational and helpful!! 

I gotta confess something, the best part about this trade, is the number of people who made some amazing profits from this ROKU trade.... I get a big time rush helping other people make money and especially when i teach my techniques and strategies and see people benefiting from them!! 
Gives me a tremendous of pride and immense pleasure seeing traders "earning and learning"!



 Join the ART OF TRADING today!! 







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