Hey everyone, Robert Roy of WealthBuildersHQ.com. Welcome to this edition of Trade With Rob which is for July 30, 2021. Hope you’re having a fantastic day. Now, the markets just closed up about 15 minutes ago, so let’s go see what’s going on.
Let’s take a look at the S&P 500 and let’s see how we did. New all-time high! Closing high? Not so much. We closed up a little bit higher a couple days ago. Overall, great pattern. If you’re looking at this and saying, “Rob that looks a little different than the last chart I saw,” you’re right. When we met with our advanced training group, Mastermind Group, and Power Option Plays students, we redrew the Fibs on the S&P 500.
So if you look at the Fibs, here’s a great V-bottom down in here, good move up. This was just a hiccup, a one-day “oops, bad deal.” Came up, nice V-top that took us down to the .236. Now, we’re broken out, and it’s not surprising to see this up and down pattern we have in here, because as we hit these all-time highs, traders are trying to determine what’s next. If you’re looking at the next upside target, we’re looking at 4456 on the upside.
With that, let’s take a look at MSFT, Microsoft – is our trade setup for the day.
If you’re not familiar with this trade setup which is called the Zero-Line Breakout trade, click here.
Here’s our V-bottom on MSFT, move up, sideways, we move up until the top and the we pull back to our .236, which is our hesitation level. We finally break upward, and when you look at this candle that broke out, some of you are saying, “Well Rob, I should’ve just taken the breakout there,” and you could have. But, breakouts have a tendency to be “here, kitty kitty”s, failure points where they pull back below that zero-line.
We look for a move to close above, in an ideal world, come back and close at or near the zero-line, and then bounce. That’s what I like. You make look at it see it move up, retest, and bounce all at once and you decide to take that. That is your call. If that’s your risk profile and you’re happy with it, go for it, baby! Not the way I prefer to trade them. I will occasionally, but not normally.
So what are we looking at here? I need to see it come back and close somewhere near that 284.10 level, and it doesn’t have to get right there. I don’t need to be exactly at 284.10, but I’d like it to close down a little bit. It closed today at 286.50. Come on down, baby, come on down! Now if you see that as a retest and a bounce, that’s your call if it fits your risk profile.
So if we do take this trade and it bounces off of the 284.50, what are we looking to do then?
If it comes down and closes here and we get our bounce, we’ve got our stop set at 281.50, and our first target is going to be at 288.50. So you’ll sell half of your trade at target 1. What if you only have one contract? Then you’re out. Trade’s over. If you do get filled at the first target, you’re going to move your stop up to breakeven. And then target 2 is 294.
That’s it! It’s as hard and as simple as that.