Key Takeaways

• The cooling market’s making some trades more difficult and the sidelines more appealing…
• The best way to trade in these market conditions…
• What to do if you don’t have a strong gut feeling that a setup’s headed to the moon…

Bryce here. If you haven’t noticed, the market seems to be slowing. A lot of subpar momentum plays are getting crushed to start the week.

To me, that means one thing — focus on quality setups. Now’s the time to narrow your watchlist down to the charts you’re really confident in.

I’m sitting on the sidelines for the most part. But let’s break down some charts I’m watching (and why I’m not trading most of them).

But before I get into that…

My 25%+ Watchlist Pick

If you caught the Sunday watchlist, you might have taken note of my pick Newegg Commerce Inc. (NASDAQ: NEGG).

Well, it was up as much as 25% yesterday. (Check that, Monaco. My first day back, I picked huge runners!)

I called NEGG as an afternoon play, and sure enough, it ripped into the final two hours of trading.

Congrats to anyone who banked on NEGG. Be greedy with your gains, but keep this one on watch for future moves. 

Let’s get to another chart I’m watching…

AMC Entertainment Holdings Inc. (NYSE: AMC)

 

I’d be slacking if I didn’t mention AMC today. The legendary meme stock feels like it’s rustling up some momentum on social media.

Big picture, the chart has held up incredibly well. Remember that bears have been calling for this stock to drop back to sub-$5 since January, but it just doesn’t break down.

But we gotta have some perspective here. This thing already went from $2 to $72. The big move happened, and now the risk/reward isn’t there for me.

I just don’t have personal confidence in this setup, so I’ll stay on the sidelines. But I’m definitely watching AMC. It’s possible another big move could happen … Grab your popcorn!

Now I’ll hand it over to Matt to discuss his recent foray into options trading…

Cassava Sciences Inc. (NASDAQ: SAVA)

 

Matt here. Options trading isn’t exactly my bread and butter, but I’ll dabble from time to time. And that’s exactly what I did on SAVA a few weeks back. 

I was trading calls on November 5. I bought them in the morning and I was immediately up around 40%.

So what did I do? I went to the gym and let the trade get away from me. 

When I got home, the stock was up almost $3 but my options were DOWN. Are you kidding me? Options trade so stupidly…

Honestly, I should’ve just bought shares. But now I’m taking some lessons away from this trade, and maybe you will as well.

Here are the 3 things I learned from my SAVA trade:

• Don’t buy weekly options. The gains can be crazy on weekly options, but the time decay is brutal (see my trade).
• Don’t size big. Options can have a big upside, but they also carry a lot of risk. Size accordingly.
• Don’t go to the gym while trading. I left my computer and went to get a quick workout mid-trade. Big mistake — Sykes is gonna be pissed! 

Now onto a trade that won’t make Sykes mad…

Digital World Acquisition Corp. (NASDAQ: DWAC)

 

I learned my lesson and bought options AND shares with this one last Friday…

And I didn’t buy options expiring that week. Yay me!

DWAC was on my radar because of the consolidation period it was in … And I wanted some exposure to a potential breakout. 

I bought calls with a few weeks of runway on them. I knew the stock had a chance at getting to $75 on a breakout.

But I didn’t want to ruin my weekend by holding. As it started spiking, I pulled out for a nice gain and made up for some losses earlier in the week.

Trades like that make tough losses worth it…

Options trader or not, you should check out this powerful shortcut for traders with a small account … Learn more here!

Trading is a game of winning and losing, but the most important thing is being consistent. Learn from the good and bad plays and carry that knowledge forward.

Bryce and I learn new things every week, sometimes even every day…

Onto the next one!

Blast off,

Bryce and Matt