Highlighted Trades - 05/07/2024
We had a relatively quiet day today - 8 trades across 5 tickers, with an even mix of longs and shorts. Of these trades, none won or lost more than 0.17%. Regardless, let’s check them out.
Our short on CDW was, in my opinion, our most interesting trade of the day. We lost a total of 0.15% here, across 3 entries. But between these entries, we made our best and worst individual trades from today.
That second entry is our best individual trade from today, making us a total of 0.12%. I think our entry conditions on it are a bit stronger than our initial entry candle, due largely to the better momentum. There’s strong negative momentum going into it, but we enter on a green candle with a fairly large upper wick. That shows an overall market uncertainty about that momentum: a sign of a potential turnaround. This isn’t a major red flag by any means; the point here isn’t to show that our first entry was flawed, but that if you took that first entry, you probably liked our second entry even better. We have all of the same signs present, but a larger red candle with no upper wick. The difference is slight, but given the relatively strong entry conditions of our first entry, and slightly improved ones on our second, it makes it difficult to refuse the re-entry.
Our third entry was our worst trade today and, unfortunately, I don’t think this one was avoidable. The only real red flag with this entry was a weaker MACD, when compared with our first and second entry points. But, though less negative, it had not gone positive between our entries, making it a pretty minor red flag. It’s unfortunate when it happens, but it looks like this was a trade that just didn’t work out for us.
Another trade I want to examine is our short on LKQ. There were no re-entries here, and we broke about even here: -0.06%. I actually really like our entry conditions on this. The stock has minimal chop, in addition to good directional movement throughout the day. The lagging line is cooperative, MACD solid enough, with good short term momentum as well. The cross could be stronger, but on the chart, it looks like a fairly trade-able signal. At 14:10, however, the stock takes a sharp turn against us, shooting past our stop loss. Again, it’s unfortunate to see, but given that our signal has about a 32% win rate, plenty of trades like this are inevitable.
The last trade I want to highlight is this long on FITB, where we lost 0.12% - a minimal loss, but a loss nonetheless. This is another loser that I think was hard to avoid. The only red flag here is that the stock price is fairly high above the Tenkan-Sen line during our entry, meaning that if you took this trade, you were betting on an even higher climb. That’s a non-trivial red flag, but one that’s easy to miss, especially with the incredibly strong bullish momentum on the chart. Even though this trade is flawed, I can say with general certainty that I would have taken it.
Overall, today wasn’t a great day for our system. We hope to see improvements, but have alternatives we can roll out otherwise.
That’s all I have for you tonight - thank you for reading, and happy trading!
