The Weekend Shift – Episode 15
The Price Action
A lot of the setups have been negated by all the gap ups, and gap downs. During the day Rob has been saying, “Don’t get the FOMO.” This is for the beginners to understand that we don’t just jump in something blasting. We let them open, and then trade the reversal back up, or down.
Listen to Air Traffic Control
Just like any great batte there is a Commander on the field directing the forces. For us, that is Rob. He says he is more like air traffic control. He is looking at the entire market, and seeing where the buyers are really going. He puts out a lot of content, and stock picks for your watchlists. Trade those picks. You will have more success doing so. We all want to be confident that we know The Strat, but going out, and trading a reversal on a penny stock might not give you profits you seek. When you take your trades, we want you to return to the flight line successful.
The broader averages and the Weekend winners
The price action for this week was very choppy. The S&P 500 on the monthly is scenario 2 down, but it is green. We are closer to going outside month. This is putting us in a situation that is outside month in September, October, and now December. This explains why trading has been so difficult across the board, no matter the strategy. There have been a lot of gap ups and gap downs on the daily charts. On the Weekly, we are 2-2 reversal up on the weekly. This went in force at $446.52. We are close to hitting the top of the weekly broadening formation. Most of the week has been inside on the week on S&P 500, Dow Jones, and NASDAQ. This also made trading difficult. In the Live chat with Rob on Tuesday when the SPY opened as a gap up at $464.53, he told everyone don’t get the FOMO. We trade reversals, and we don’t just jump in on 2-2 continuations.
During the Strat Time report, Rob showed how you could drop down to the 5 minute or 15 minute time frames, but find a reversal to get in on. Don’t forget, you can also take a 2-1-2 continuation to get in on a runner. For the beginners, it was run sheep run, and it was time to get in and get killed.
The top winners from last week’s Weekend Vid from Rob Smith were:
- JOHNSON AND JOHNSON (JNJ) 2-2 REVERSAL
- C.H. ROBINSON WORLDWIDE (CHRW) 2-2 REVERSAL
- UNION PACIFIC CORPORATION (UNP) 2-2 REVERSAL
- COSTCO (COST) 3-2 REVERSAL
- MICROSOFT (MSFT) 2-2 REVERSAL
- PEPSI (PEP) 2-2 REVERSAL
- MONDELEZ (MDLZ) 2-2 REVERSAL
Jammin' on Pivots
I first learned about Jam Trades on Twitter. He start working with Alex Options, and started following me (The Strat Soldier) as well. After seeing some of his stock picks, and chart analysis he got my attention.
During an improptu market review on Alex Options discord Jam Trades went over what was going on in the broader averages. I could tell in his voice, this is a very knowledgable guy, and he is very passionate about trading.
Jam trades has been trading the Strat for a year, and is a current member of the Smith’sIntheBlack trading room. You will see him in the chat. Next time you see him, make sure you give him a shout out. Also pay attention to what he says, he definatly knows what he is talking about.
Stratin' with Pivots with Jam Trades
How to use pivots in TradingView to have another reference point in the Broadening formation series.
Jam Trades started as an investor, and found the Strat through a tweet by Alex Options. He has been trading the Strat for a year now. The aspect of the Strat he likes is being able to see exactly what a stock is doing in the Broadening formation series. He also enjoys trading against others in losing postions. This means he’s trading what the price action is doing right now, as opposed to just going with what the experts say the stock is going to do.
Jam Trades uses an indicator called Pivot Points Standard in Trading view. This can be found by accessing the indicators section and typing the name in the search bar. He puts four to five of the indicators on his main chart. The setting for each one is “Traditional” and a time frame is selected for each pivot. For example, Quartley, Monthly, Weekly, and Daily. Next, he will turn on and
off the pivot he wants to see.
The pivots are static, and do not move. They are set for the whole year. The institutional buyers and traders in the pits are using these pivots to program algos when to buy and sell. Jam goes over a quick formula for calulating these pivots. He takes the price of the highest close, adds it to the price of the lowest close, and divides by three. This will be the pivot the particular time frame and will not change.
“These pivots give me context, I know where I’m at in space.”
The pivots are set as P1, center pivot, R1 first resistance level, and S1 as the first support level. The sequence for the support and resistance levels range from S1/R1 to S5/R5. When the price is at P1 to R1, the price is bullish. WhenitisatP1toS1,thepriceis bearish. Jam uses these pivots as a reference in the broadening formation to confirm what reversal he will be executing. When a reversal lines up with a pivot on the weekly or monthly, he will take that reversal. For example, he will take a reversal on a 30 minute time frame at the P1 weekly pivot for a weekly trade. The weekly and daily pivots are commonly used for day trading. These are used to trade commons as well as options, are a good way to gauge sentiment of the market, and are good for the whole time frame. For example, during the week, you can see where the algos are programmed to buy when it hits the center pivot and sell when it hits the R1 resistance pivot on the weekly pivot. “When looking at Apple, do I really want to short it when I see this (selling), but when I put the pivots back on I can see where they programmed the algo to sell, and that gives me a reason to believe that Apple is taking a break. These pivots give me context, I know where I’m at in space, “ says Jam as he clicks the pivots on and off. We see that Apple comes off of the Monthly center pivot, and sells at the first R1 resistence pivot. This is used as confirmation with what we are seeing in the Strat. The key thing with the Strat is trading against people in losing positions. With the pivots, you have an eye on what other traders are seeing and doing.
EYE ON IT
Inside Bars on The Weekly
There were a lot of inside bars forming on the weekly time frame that closed this week. These are now actionable signals for next week. You will be looking for 2-1-2 reversals, and 2-1-2 continuations to work.
After seeing Jam Trades’ video on how to use pivots these can be used for more confirmation. Let’s see what they want to do. Keep buying, or sell it off.
Software
Weekly Tips
The Disjointed Channel tool found
in the TradingView drawing tools is a quick, and easy way to draw broadening formations. This is great for beginners, and a no hassel way for experienced Straters.
Quickly draw them on the 60 mintue time frame during trading day, and now you have more context as to where the price can go.
Jam is using these pivots to set his stops as well. If he takes a reversal, and it hangs around the P1 pivot for a few hours, but doesn’t really break down closers to the S1, he’s not freaking out. The same goes for the downside stuff. If he takes a reversal on the R1 pivot for a 2-2 reversal down, he’s not panicking if it hangs around the pivot before it really goes.
These pivots can also be used for your IRAs. Using the yearly pivots is a great way to gauge where to put your money for longer term trades and investment. Quarterly pivots can
be used for this as well.
An interesting tool that Jam uses to draw broadening formations is the disjointed channel tool. This is found in the drawing tools in TradingView. He recommends using this to draw quick broadening formations to create a plan for the next day.
The last thing Jam shared with us was that he only trades a small basket of tickers. He will trade the pivots and broadening formation series on these only. This is a great tip for the beginners, and the experienced alike. When Rob is calling stuff out in the Live trading room, if it is something that is not in your wheelhouse, you don’t have to take the trade.
In summary, Jam Trades uses static pivots to gauge where he is in the Broadening formation series. This gives him context as to where he is in “space.” The pivots are used as another confirmation of what he is seeing in The Strat. It is a quick decision point if really wants that reversal. I see this potentially being a great tool for beginners to help see The Strat and where to put stops.
This Week’s Strat Q&A Tips
Q: Do I have to wait for full time frame continuity to take a trade?
A: Short answer, No. You do not have to wait for full time frame continuity. Remember that this is the second universal truth, and that it is about the color of the chart, not the scenarios. You can have a 2 down month, inside week, 2 up day, and 2 up 60 minute that are all green. This is still full time frame continuity to the upside.
When it comes to the gap list we don’t have full time frame continuity on these most of the time. The month will be red, the week red, and the daily is gapped up
and green. Now you are looking for the 60 to go green as well. This can also be worked to the downside on stocks that gapped down after earning or news continuity. The Month can be green,
the week green, but the day
and 60 both red. You don’t
have to trade in full time frame continuity, but you want at
least two timeframes working together. This is trading in Control.
Who did this? This is great lol
Jermaine, thank you for write down the show. Excellent summary. Now, I understand more and more…….. Keep it up…..
Thanks for the excellent write up Jermaine – such good info here, gold actually, thanks also to JamTrade’s for the info on pivots! Awesome.