Welcome ladies and gentlemen, Robert Roy here, founder of WealthBuildersHQ.com, and welcome to this edition of Trade With Rob, which is for Monday, May 17th, 2021. Here I am sitting bright and early on a Sunday morning, getting ready for the rest of our weekend. Just wanted to get this video done. Let’s first take a look at where the S&P is at, and we’ll go from there.
So the very first thing we look at for those of you that are brand new, for those of you who’ve been here before, you’ve seen me do this, we’ve got a great Fibonacci here on the S&P 500. Good move throughout, we’re recently hitting all-time highs, both closing and intraday as well, and then we had those dreaded couple of days, that gap down, that little recovery, that gap down, and a thrashing. We move back up in here which didn’t give us anything (it was an inside day), and then we closed up above our 8 and 21 EMAs on Friday, bumping our heads yet again on the wretched 4181. When I say “wretched,” it’s actually a phenomenal level that gives us insight into why it’s stopping there which most other trades have zero clue with what in the world is going on right now.
So with that, we want to go ahead and take a look at our candidate today which is ANET, so we’ll go check that one out.
We’ve got couple different things in here. So, we a zero-line breakout; I want to show you the entire Fibonacci here first. Here’s a nice V-bottom, we had a nice move up – we’d call this a hiccup because of this big move in the middle, but it’s fine – we make this move up, and we just kind of chug, and we finally get that change in direction right there, which came right after the earnings. And, we got this breakout from the zero-line right here, which is a difficult task to take. You’ll find that if you track these zero-line breakouts, that in many instances, we get a break out, it becomes a “here-kitty-kitty” and it thrashes back down through the zero line again. This time it worked. It ran into our .136 level which is our next Fib line.
So what happened on Friday? Now we’ve got a retest, a breakout again. Could we have taken the breakout? Yeah, if you got the right breakout, but how many times have we had a head-fake and turn back around? I would rather wait for a retest.
So what do I want to see happen? This is not an “I want to take an entry on Monday” trade, unless you get a retest of this 323.39 and then bounce. Now, it doesn’t have to be an exact hit to that level, but you want it to come down where it’s not sitting at 326 with support at 323, and my stop is all the way down here at 320. I really don’t want to put that much at risk. Besides, until you get confirmation, you don’t know if it’s a head-fake or not… “Here, kitty kitty…” *WHAM* No. We don’t want to do that.
So what are we looking for? If you get the retest and the bounce, take the bullish entry. Your very first target is going to be at 330, right around there-ish. (Obviously, you’ll set your targets based on what works best for you.) That first target will take half of the trade off the table. The second target will be at 338. If we are wrong, your initial stop is set at 320. You’d adjust to breakeven after the first target is hit; that second half of the trade is a free trade, so you’re not giving anything back if you move back down and you’re taken out of the trade.