Trade Analysis - WATT

Date of Lecture

• April 3rd (recorded) / April 4th (to be posted)

Trade Overview

• Stock: WATT
• Initial Buy Alert: $8 (before the spike to $16)
• Reason for Initial Alert: Exciting technology with potential but no real revenues or partnerships.
• Current Situation: Trading around $14.85 after-hours.

Key Points

• Sell Alert: At $15.50, advised not to be long due to:
  • Stock gapped for a second day
  • Previous morning spike
  • No real revenues or partnerships
• Trading Strategy:
  • Aimed to short the stock, but couldn’t find shares
  • Noticed a $2/share drop after selling alert

Price Movements

• Recent Price Range:
  • High: $15
  • Low: $13
• Market Behavior:
  • Closed mid-13s, tested 15 multiple times but failed
  • Market down trending, yet WATT showed resilience

Current Position

• Average Buy Price: $14.62
• Rationale for Holding Overnight:
  • Belief in breaking past $15 due to:
    • Previous gaps up (previous days)
    • Higher lows observed throughout the day
• Market Context:
  • WATT went against market trend, showing upward strength

Risk Assessment

• Potential Outcomes:
  • If it fails to break $15, exit at around $14.80 with minimal loss
  • If it breaks $15, potential for rapid gains to $15.50, $16
• Volume Analysis:
  • Noted significant trading volume indicating interest

Trading Philosophy

• Strategic Approach:
  • Focus on patterns and market indicators rather than blind following
  • Importance of planning before entering a trade
  • Emphasis on learning and understanding trading mechanics

Success Stories from Students

• Tim Grittani: Achieved $1.7 million in profits; understanding patterns led to success
• Michael Good: Up to $1.3 million; mentors other students

Conclusion

• Final Thoughts on Trade:
  • Despite a smaller percentage gain, the strategy was sound
  • Importance of having a detailed plan and sticking to it
  • Encourages students to think critically about trades
• Lesson:
  • Trading is about making educated guesses based on patterns, not just luck
  • Stay agile and be ready to adjust strategies based on market behavior.