A most interesting chart - rising on defense or return to 100?
Walmart is supposed to be a defensive stock to buy when the market drops, but the charts show that price may head lower.
Reasons for weekly 115 puts (higher risk) or swing trade 110 puts (lower risk):
> In candle chart, green rectangle, you see a very bullish pattern between 2/27-3/2, and also a bullish engulfing candle on 3/6. However the volume directional moving index is low, suggesting this could be a rubberband effect that will not last.
> Chart shows daily resistance line, dotted red
> Between 2/21-2/25 (3 days), stochastic %K dropped from over 80 to under 20. The ensuing drop and quick rebound might give way to more downside --> look for RSI on daily to head back below 50.
> Simple moving averages are in descending order: 10<20<50<100. one caution, 20sma is flat.
> On weekly chart - 10sma is below 20sma and stochastic %D is below RSI. Price is testing 20sma.
You can watch 30m timeframe for more signals to open puts, such as RSI moving lower and 10sma crossing below 20sma. On daily watch for the same, and for resistance line to hold.
Reasons for weekly 115 puts (higher risk) or swing trade 110 puts (lower risk):
> In candle chart, green rectangle, you see a very bullish pattern between 2/27-3/2, and also a bullish engulfing candle on 3/6. However the volume directional moving index is low, suggesting this could be a rubberband effect that will not last.
> Chart shows daily resistance line, dotted red
> Between 2/21-2/25 (3 days), stochastic %K dropped from over 80 to under 20. The ensuing drop and quick rebound might give way to more downside --> look for RSI on daily to head back below 50.
> Simple moving averages are in descending order: 10<20<50<100. one caution, 20sma is flat.
> On weekly chart - 10sma is below 20sma and stochastic %D is below RSI. Price is testing 20sma.
You can watch 30m timeframe for more signals to open puts, such as RSI moving lower and 10sma crossing below 20sma. On daily watch for the same, and for resistance line to hold.
Trade active
I bought weekly 115 puts yesterday and will hold overnight as long as today's close is below the red resistance line. I had a technical hunch that stocks would try moving higher today; I should have been more patient to see if stock comes up near resistance line, which it did.Note
We now have 30min bearish candle pattern (first 3 candles of 3/10). A trade below 117.31 confirms more downside. Also in this price action you see stochastic %K dropped from >80 to <20.Trade active
Sold 3/4 position (weekly 115 puts) at $2.45. Bought them Monday at $1.77.Note
Yesterday stock closed above resistance line, but today's open was a bearish reversal. Will be looking for RSI to return below 50 on 30m chart.Trade closed manually
Will close remaining puts today for a small profit.Options are expensive so theta decay and IV drop can hurt. Prefer to keep capital for new trading opportunities the next day.
Note
those 115 puts would have yielded a tremendous profit today. Remember, if you are confident in your decision when you make it, then don't create mental drag with regret. I missed profit, but my aim yesterday was to preserve capital, so I only kept one put position open overnight.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.