The Shakedown 12/22/19

Low Volume Alert!

These final two weeks of the year, especially this year the way Christmas and New Years magically fall on Wednesday's (maximizing the break), are notably the lowest volume weeks of the year.

There's an old saying in trading, "If you're trading the 52nd week of the year, ya didn't make enough the first 51!" I'm not sure if that's really a saying but that's what the older traders would say to me & Bennett the first week of January after we were the only ones in the office over the holiday LOL. 

That saying changes to 'the first 50 weeks' this year due to the holiday getting stretched to two full weeks, so any trades you take over the next two weeks, keep it lighter as volume isn't on your side. The lighter volume in the market, the higher propensity of seeing fake-out moves driven by 'day trader volume,' so it's usually an easy time to get chopped up if you're over-trading.

From an overall market outlook, the trend is still in tact. We are a bit overbought which makes putting on new risk tough, but the S&P is still healthily riding the 8 day moving average higher, and going sideways when it needs digestion -- and not pulling back forthat  digestion. There is a big difference in that, and it leads me to believe, almost unbelievably, that we continue moving higher. Everything changes if we see some extreme selling, but again, we've ONLY seen the indices move sideways when they've needed digestion.

Seasonally, January is usually weak for stocks so I wouldn't be surprised to see the rally continue into year end, and then getting that next pullback early in the new year. A big "we'll see" though. I have most likely put on my last trades for the new year and will just be managing swings the next couple weeks. 


TTWO has a beautiful base on the daily chart. It's top competitor EA was trade of the week a few week's back (currently up 8%) in a very similar setup. The EA setup was a much more drawn out base, but overall the chart was much weaker - giving the EA setup more of the "Macro Setup" monicker than this TTWO. The 100sma has been huge resistance, currently sitting at 124.40, and we want to see that taken out on strong volume.

I would expect to know whether TTWO is going to work or not much more quickly than EA with it's higher beta and overall much more bullish chart. Here is the EA setup going into the aforementioned week below for comparison --

EA was a much more beaten down stock going into the setup, meaning you needed a much larger time frame to capitalize on the trade. I dont believe that is the case with TTWO.

Here is the TTWO weekly chart above showcasing the tight inside week it just put in. An inside week can be seen as a week of consolidation where buyers are meeting sellers at the battle lines. I love when a setup has an inside week below a breakout level, as it's usually the last fight the sellers are putting up before letting the stock rip. Get some volume through that 125 area and I believe this thing rips. 

Trigger: $125

Stop: $121.49

Target: $136-142+

Hope to see you in the chat Monday!

Watchlist coming in the following email.

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