Analyzing a “Not So Great” Trade with Barrie Einarson

Analyzing a “Not So Great” Trade with Barrie Einarson

Apr 18, 2024

Hello, everyone, Barrie Einarson here from Trade Ideas with a slightly different take on our usual discussions about what makes a trade great. Today, let’s talk about what makes a trade not so great at the moment.To Subscribe:
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Earlier today, our AI alerted us to THCH at $1.31. Typically, I’m all over these lower-priced stocks because they have the potential for significant runs, especially when they’re linked to earnings plays. Just yesterday, another similar, economically priced stock made a big move after an earnings report. But today’s focus, THCH, didn’t quite set me up with the same confidence.

Upon reviewing the weekly chart for THCH, a few things stood out to me that caused some hesitation. When I “looked left,” as I always do, I noticed several previous highs that could pose resistance—$1.44 and $1.39 stood out in particular. This historical resistance suggested that breaking through might be a challenge.

It was around 12:34 PM Eastern time when I was analyzing this. Despite the AI alert, I chose not to take the trade immediately. The stock had already touched today’s high of $1.44, exactly one of those resistance points, and stalled there within the week. This sort of alignment between historical resistance and current price action is a red flag for me.

This brings me to an important point about trading with AI alerts: Not every alert is an automatic trigger to trade. It’s crucial to assess each alert critically. I click on each AI-generated alert, but if the charts and other indicators don’t align favorably, regardless of the source, I won’t proceed with the trade. Today, the resistance at $1.44 was just too strong to ignore, and thus, I decided it was better to sit this one out.

That’s not to say THCH won’t break through eventually—perhaps later today or tomorrow. Sometimes, all it takes is a surge in volume or a shift in market sentiment, and a stock can surpass these barriers, potentially reaching targets like $1.80. But as of this moment, based on the data at hand, I felt it prudent to hold off.

As we gear up for next week’s test drive and contest, it’s important to remember that trading is as much about the trades you decide against as the ones you decide to take. Each decision shapes your strategy and, ultimately, your success in the markets.

I’ll keep you updated on any changes with THCH or other stocks that catch my eye. Until then, trade smart and see you in the next update. Bye for now