Welcome ladies and gentlemen, this is Robert Roy, your host from WealthBuildersHQ.com. Welcome to this edition of Trade with Rob, which is for the 25th of August, 2021. Hope you’re having a great day. Let’s go ahead and jump right in. First off, keep in mind that everything we’re going to do here today is for educational purposes only. Nothing is meant to be advice and/or recommendations.
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So let’s jump in first to the S&P 500 and see what the heck is going on there. So let me bring this in just a little bit. I’ll grab a pencil and a small gap up. We had a nice move to the upside, a small pullback, and there didn’t quite fill the gap in, but we came back to the opening price. Good run up and a pull back at the end of the day. So we wound up finishing up just about seven points on the day. Not bad overall to be up seven points. I’m okay with that. Right? Good move. A lot of it happened at the end of the day that we gave back, but we’re still positive overall on the day.
So when we look at the S&P 500, when we look at the bullish picture or the big picture, I should say, right, we’re looking at a daily chart, you can see we’re just rocking and we’re rocking. We’re rocking, we’re rocking and new all time high today, new closing high today, we’re just killing it.
So with that, I wanted to find a candidate today with the position that we’re in, that had a very strong potential to move. And what I came up with today was Mickey D’s McDonalds (MDC).
First thing is, I want to explain to you what we’re looking at on our chart. We always want to go over and spend a little bit of time talking about the fibs and why they’re important. Here’s our V-Bottom. We come up in here and there’s our V-top. So there’s our areas of strength, support and resistance in them. We pulled back to the .236, which we put as an h which is hesitation right now. We just hung around in there for quite some time. We broke out on this day. And that was really the very first time we broke out. There was really the very first time that we broke out was right here. We broke out and we pulled back, so now we go and do it again and we get this breakout intraday here, and there are traders that saying, “I took that trade!” And my question is, “okay, what gave you the signal? Was it because it works so well the last time it broke out?” And I’m not saying a breakout doesn’t work, guys. It can, but you have a less of a chance of being right if you’re waiting for the breakout to come to fruition, then if you get some kind of retest first. It broke out. It rocked. It ran all the way up, hit our first line. Didn’t quite make it to the second line there, vacillated a little bit, came back, it broke out again, failed. And now we’ve got another opportunity right here. Okay?
So here’s what we’re looking for on MCD… In an ideal world, I want to see a small move to the upside, a big gap. The trade is over a big move down. The trade is over. And what we’re looking for is give me a small move to the upside. If I can get that tomorrow, the day after whenever it is Wednesday, Thursday, get that small, move up, I’m looking at to place a bullish trade.
And if I am wrong – what I’m going to do is I’m going to place two contracts. That’s how we place these. And again, this is for educational purposes. Only you will use whatever number of contracts work for you. If you’re doing it on paper, which is what I suggest, I want you to do two contracts, could you do 200 or 2 million? You can do whatever you want. 2 contracts gives you a way of scaling out of the trade, which gives you the biggest bang for your buck.
So what we’re looking for is take two contracts right there. If we’re wrong, we have our stops at right down here at 236, our initial stop. Once the stock moves up and hits 242, this is target number one, 242. You’re exiting half of your trade. If you didn’t listen and you placed 10 contracts, you’re going to sell five.
If you have four contracts, you’re selling two, if you have one contract you’re selling well, one. You’re out of the contract, the trade’s over, you’re done. If that happens and you get up to target one, and you had more than one contract, you sold half, you will move your stop up to above breakeven of where your stock was when you entered the trade. So 239, 240, whatever the number is. So that if it does pull back, you’re stopped out of the second half of the trade, you’re not giving anything back right on that trade. You’re you still coming out breakeven made a little bit cost a little bit. Overall, you’re doing well. Target two is going to up here at 246.75. So if you get into this trade, 239, you get out at 242, you’ve got about $3 move. Your next target is 246.75. So another three and three quarter on top of that, so about almost $7 on the second leg, but it’s important to remember that that stop gets adjusted after the exit of the first position. The goal there is so that we lock in the profits that we just made That’s target number comes comes in. Number two gives us the runner and that’s where the home runs come in, right? We’re not going to get home runs on all of them. Many of them, you won’t get home runs. The goal here is to find trades that have the potential to move and capitalize on it.
All right, with that ladies and gentlemen, we are done, right? So make it a profitable day. Stay focused on the quest to becoming a great trader, keep crushing it. And remember, you’re just one trade away. I will see all of you at our next update. Do not forget subscribe and hit the like button if and ring the bell. If it’s something that you liked and enjoy, let others know, help us out with YouTube, that it helps us in the algorithms as well. We appreciate everything. Folks take care. Bye for now.