CDXC Trade Review

 This specific trade review is for SMB to show my thought process around this trade. 

THE SETUP

CDXC is a biotech name that had a clear tight range looking ready for a breakout. Breakouts alone are not enough for me to take a trade. There are over 30 different things I take into consideration before I decide I want to look to take a trade on a name or not. I will list the ones that I found noteworthy on this specific one. 

Mainly, some big biotech names around Jul 22nd were seeing some pops and IBB was also breaking out higher from a range reclaiming all the Daily Moving averages. CDXC about to do the same. I thought strong market, strong sector, potentially strong move?

Other notable points 

50MA showing clear buy candles 3 separate times, Anchored vwaps from Earnings days/pivot high and low just underneath of price. Failed triangle breakdown and near remount of TL. Other triangle breakout to the upside just barely broken.  

Volume is also starting to increase. Clear Value Area POC just under price showing good Support. Clear volume gap to 10$ If price can get above 10$, looks clear for take off.

Other notable points I have tagged in my spreadsheet, MAs are coiled tight, MAs on Lower time frame are all supporting. There was a failed breakdown day before. Market is strong and trending on daily. Market is strong intraday. It was showing relative strength. 

Day of entry there was a MACD cross of the daily. RSI also breakout and diverging higher. OBV also diverging higher. 

And lastly the weekly chart also showing clear tight support. 

Essentially I am considering this trade as a pullback swing trade, into the breakout where I look to take profits. 

THE EXPECTATIONS

Ideally I want to buy my call options on a break of the previous day high, and add if it starts working right away. With a name this small priced and low ATR, I want to buy higher delta options around .60-.80 delta. 

Once in the trade, I want to see it hit either a Breakout level, or an Anchored VWAP level to see if its going to find trouble, see the selling, and then take profits. If price goes straight through no problem, then I hold and wait till I see a reason to sell. Usually a trend break on 1/5min. 

Stop loss is if I get in, it breaks LOD, and holds under LOD. 

Stop Loss at later point in day is it it breaks either Daily level/vwap and holds under. 

THE TRADE 

Right at the open, we break the D, I get in starter, holds and pushes higher I add my 2nd lot and wait to see more info. I am long 5 contracts at 1.075 with risk at .85. Risking a bit more than 100$

 The trade gets to the BO level at 9.61 looking like a good move to 10 is next. We get above it and dont see any rejection so I keep the position on expecting more to come. Intraday stats I also keep track of, there was big strong buys at time of entry. RVOL however super low at .3

It runs all day and gets to 10 at end of day, and sees even more buying into the close. No reason to sell I hold on overnight. 

NEXT DAY

A thing I am keeping in mind

Is that while its a good start to the trade, The last several times price has been here, it has gotten rejected lower fairly quickly. So I am watching carefully at past history, and each time it was up here, it would lose it hard at the open and never look back. So next day if it did the same, I would err on the side of caution, take my win, look to get in if it reset.

And that is what happened, next day at open, gapped slightly higher, sold off right away, retested vwap and then broke lower and that was my cue to bail.

However it did not break lower, it started holding again. I waited for a clear sign of re entry to come and got one with a nice base under vwap and TL coming down lower into it. Once it got above vwap that was my starter back in, and added right away if it kept going. And it did. I had essentially lost the spread dealing with exiting and re entering. 

Trended higher again rest of the day, slight sell into close.

Next day, still keeping in mind that sell history. And this time we got it. Gapped slightly lower, IBB also still looking super strong at top of range breakout, however we had a lot of correlation here, more than likely due to lack of high RVOL.

Simultaneously, when CDXC breaking down, so was IBB looking like failed breakouts across both of them.

When CDXC lost LOD a 2nd time after failing to reclaim vwap, I exited the trade now with a loss.

RESULTS

Ended +.5R

THOUGHTS

Was one of those trades you had to be really fast to exit before the sell came quickly and I lost premium. We went from looking like excellent breakouts on IBB and CDXC, to failure and seeing a big sell fairly fast.

In my stat spreadsheet I did give myself an error saying I exited too slowly and I agree. Telling myself that the history on this name is to see that sell come fairly quickly at the open, I didnt follow up on that quick enough, and took a bigger L than I could have on the re entry trade.

Another thing to think about is if I should have taken profits on the breakout of 10.34 on my re entry trade. Given that IBB and CDXC were both showing relative strength, good tape, no failures up until that point. I think its ok that I held that full size overnight again. It got above the BO level at the close, and closed above it. I kept the risk on and I think all signs pointed higher at that point still, no regrets. 

-Get out faster when signs clearly say to sell/there is no strength. History/Price action of stock, Price action of Sector/Industry with low RVOL.