Happy Weekend!

Despite a hectic week of packing up and moving New England to the South, I’m watching SPY closely.

The PPI manufacturing data that came out this morning wasn’t good.

It appears that while consumer inflation is cooling, wholesale inflation is still on the rise. Not good for the economy.

And, of course, the markets reacted with a SIGNIFICANT gap down.

As I write this, I’m watching the bulls fight ferociously to hold SPY above its “death line.” So far they’re winning, but the day is far from over.

The $445.00 level I’ve been discussing all week is CRITICAL. It’s the final line in the sand.

If it holds, we may see a rally next week…but if not, then a MAJOR correction could be coming our way.

The “death line” has held up as support three times now. Let’s see just how strong this is.

I’m not telling you what to do here, but going long right now is risky as hell.

Keep your head. Trade sanely and safely.

So it’s time for our end-of-week review.

Here’s how my Bullseye Trade worked out that I laid out for my members on Monday this week (before the market opened).

As I was scanning the market for opportunities, I noticed a healthcare device company called Dexcom (DXCM).

They’re a major innovator in the diabetes management industry.

(An issue that affects over 11% of the US population).

Post earnings, shares saw a spike of nearly 8%, followed by an almost 20% sell-off. That’s lots of institutional interest.

And it’s in a sector into which we could see rotation soon.

So I sent out the following to Bullseye Trades subscribers last week on Monday before the market opened.

You can see it had my entire game plan outlined as simply as possible.

My triggers for entry, the option I wanted at the price I’d pay, and when I planned to exit or take profits.

That is IF I took the trade…

So how did this trade work out?

I thought DXCM was due for a bullish run – but the ticker had its own ideas.

After I placed the trade, things went south… FAST!!!

The hourly chart immediately started breaking down, and I contemplated getting out right away.

However, DXCM dropped quickly and bounced off the -3 Keltner channel. Folks, that’s a big move, and I thought the likelihood of it moving back up toward the mean was more likely than a continued drop.

So I do something I almost never do – average down.

That’s right. I bought more calls and added to my position.

If you’ll notice the circled area, we DID get a bounce, and I was able to close the new calls for a small gain.

That way, if the trade crashed and burned, I’d at least offset the loss a bit with that win.

The position is still open, so we’ll see how it plays out.

I don’t really recommend you average down like I did.

It was a calculated bet that happened to work out for me. However, throwing more money after a losing trade should ONLY be done if you’re an experienced trader with a SOUND reason.

That aside, the lesson is about “defending a position.”

As you progress in your trading journey, sometimes, rather than closing a trade outright, consider how you could lessen the loss.

There are lots of advanced techniques for this.

We can discuss them in the Alpha Chamber next Tuesday. Just ask in the chat.

Remember, I’m in the middle of moving, so I will not be live this coming Tuesday, the 22nd.

But we’ll pick back up with the schedule next week.

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To your success,

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