LVS - The essence of an uptrend day

DAILY

30MIN

1MIN

One of my weaknesses has been trading poorly during "counter-trend uptrend" days. That is the bigger timeframes (eg: daily and 30 min) are showing the stock in downtrend momentum. However, the short term timeframe of the day's action as shown by the 1 min chart is showing a strong uptrend. The question now is: HOW WILL YOU HAVE THE CONVICTION TO RIDE THIS COUNTER-TREND UP MOVE?

Let me be clear that today's counter-trend move isn't enough to carry the position over night. The overall trend in longer time frames is still down. The momentum or the path of least resistance is still to the down side. Caution should be used if long to protect profit. More time/correction is needed to setup an actual reversal trade against the longer term timeframe. We REACT to what the market tells us to do, its never the other way around.

If the trend is up in the short term when the bigger timeframe is in a downtrend, it only means one thing and that is there are more people welling to buy/cover at these levels than people trying to short or sell. Why is that? Factors causing trend-reversal:

• An important level has been reached. a moving avg? 20 day, 50day, 200day, etc.
• Specific news event that changes the overall technical picture of all hands including people already in the stock AND people who suddenly become interested in the stock that is now in the spotlight. 
• The trend and momentum of the sector and/or the overall market of which the stock is situated in.

So we had our gap down in the overall market and many stocks and LVS was one of them. The important thing is the gap downs were very close to IMPORTANT LEVELS namely the 50day MA of the spy, qqqq, etc. and 200 day MA of LVS. These are all very important levels where large funds are keying on. 

IMPORTANT CAUTION IS PLACED ON SHORTS WHO WILL NOT BE AGGRESSIVELY SHORTING. SOME WILL COVER AS CLOSE TO THE LEVEL AS POSSIBLE TO LOCK IN PROFITS. SOME LONGS WHO'S BEEN PICKING BOTTOMS ALL THE WAY DOWN ARE NOW PLACING MORE HOPE ON THESE LEVELS SO THEY ARE SITTING TIGHT HOPING FOR A BOUNCE. THEN THERE ARE LONGS WHO'S BEEN OUT THE MARKET TOO SOON BEFORE AND HAVE BEEN WAITING FOR A SAFER ENTRY AT KEYING AT THESE LEVELS TO REENTER OR ADD TO A POSITION. So, we've got all these conflicting interests. THE CLOSER WE GET TO THESE LEVELS, THE MORE CONFLICTING THE INTERESTS IS INVOLVED. WITH GREATER PARTICIPANTS SHOWING UP AT THESE LEVELS, HIGHER VOLATILITY UP AND DOWN IS OCCURRING MORE FREQUENTLY. 

The key in getting on this up move is again related to the price action of the stock. You need to ask yourself, what is the essence of trend? We've got our opening drive from the gap down. The initial reaction from this initial drive is to "wait and see" if I can short this pop on a possible gap fill. But people looking for a short at this level, i'd think, majority are looking for a scalp only since we are so close to the 200 day ma. Also, we've come a long way down and putting on large short positions at this level is only what a newbie would do. As the stock retreats from the opening drive, we've got higher lows setting up. Along with a raising VWAP, that tells me buyers are stepping in. Then the safer way is to wait for bullish wedge pattern to form and confirmation our bias and buy the break of that pattern. The aggressive way is to buy each pullback at the moment the price resumes the uptrend (all the circled points). 

Another point to consider is, if we were to draw a main up trend line connecting the underlined higher lows. That trend line would have been broken many times, however price never went down. This example further illustrates the notion that once a trend is broken, price doesn't necessarily has to go down. It could go sideways, or resumes another leg of up move. The key is to notice the bigger picture/sentiment of the price action and the essence of an uptrend. We've got a raising VWAP. Buyers are stepping up with higher lows supporting every move of today's uptrend. Bullish wedges everywhere. 

So, what would be the logical way for shorting? 

• The upmove encounters resistance level from a higher timeframe. Say hitting the down trendline on the 30min timeframe. It's not an automatic short, no no, we need to watch closely that the price action at this level is weak and REACT by putting on a short.
• Price takes out a prior important low. I'd scale in a short if price breaks 39.80 + the end of day action (people would start getting nervous and giving up their hands) and look for a sharp down move to around VWAP. 
• These are all theories, what really counts is how price shows you what to do at each moment. You can only react.