Taking the conservative profit

A Tuesday Trade Edition: One of the most important concepts in trading is to review your work, and learn from the good and the bad. It’s critical to identify what’s working — to do more of it. Each week, you’ll get a trade from my trading journal, in which I explain my whole thought process from start to finish. Trading is all about finding something that works, and applying it, over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.

Let’s talk about a trade that I found in the options room. In fact, one of the members asked me about this particular ticker, and when I looked at it I knew it was a good setup for a potential short squeeze.

That’s why it’s always important to listen to other trader’s suggestions.

What was the ticker we checked out…?

Signet Jewelers (SIG).

This is the company that owns Kay Jewelers. You know that jewelry company you find in a lot of different malls? Well, it would make sense to watch this ticker right now as we’re getting into the holiday season. Jewelry is definitely purchased around Black Friday, Cyber Monday, and into the December holidays. So we have that overall macro idea, but in addition to that it has 35% high short interest and it’s right near the highs.

I got into this trade a couple of weeks ago, and I got into the trade when there was a squeeze and I was waiting for a volume breakout on the Turbo VZO. I also saw that the Trend Strength Turbo Candles shifted to green. This is a great buy signal as far as the candles are concerned because they went from green to yellow to red to bright green. That’s a clear confirmation buy signal.

The other reason why I liked this trade? An earnings report was coming up (and still is).

Normally on this trade, I’d wait and try to push it a little more. But because the market has been rather soft lately, I’m actually going to take this trade off a little earlier and take a more conservative profit.

I could take it off next week and wait and see what happens right before the earnings report on the 3rd. But most of the time I usually will leave a trade like this on directly before the earnings report but because I do already have 52% profit, it’s a good target and it’s getting pretty overbought on the Ready. Aim. Fire!, so I want to take it off.  Plus in the last few weeks, I’ve wanted to take my trades off before Friday because the Monday markets have been a little crazy.

Now I’ll watch it still. Why? Well, we might have an earnings setup form on it later. But for right now, this was just a pretty nice and easy short squeeze setup.

P.S. Beginning this Friday, Simpler Trading is having a Black Friday sale. Enjoy 25% off select courses and indicators, including my popular Short Interest Secrets course! Click on the image below to be taken to the store.

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