Post by Admin on Mar 29, 2015 14:23:14 GMT -5
( Click To Enlarge)A: COST made it onto my watch list on March 20th when it gave us some exhaustion volume ( circled) after running up for 5 straight days. When you see such a huge volume spike after a lengthy run, it it is usually a result of the big money holders exiting their positions to lock in profits. This volume and price action tells us that a pull back is coming because it takes institutional money to keep a big stock like COST running so once they ease back, the stock will fall.
B: I took the signal and entered the trade with the April 150.00 Puts on March 25th when I saw the volume cut in half and the failure to advance any higher on the days following the spike. It was a text book entry and we got taken out at the target the following day with a profit on a textbook exit.
COST was a well executed short trade. Entries like this are as high probability as they get. Set ups like this will work about 80% of the time.