In a raging bull market there aren’t a lot of spots to put money to work on the long side that offer good risk to reward. BBBY gapped lower Thursday for the third time this year bringing it within striking distance of important longer term support and around 30% from its high. My thought process was that many large managers would use this opportunity to get long because the perceived downside was considerably less than the upside on the intermediate to longer term time frames.

In this video I explain how I used this thesis to establish a swing trade in BBBY on the long side. One of the cool things about being a nimble short term trader is I can find amazing entries for both shorter and longer time frame trades. This trade was shared in our AM Meeting & on SMB Real Time where everyone can see all of our equities positions.

Steven Spencer is the co-founder of SMB Capital and SMB University which provides trading education in stocks, options, forex and futures. He has traded professionally for 18 years. His email address is: [email protected].

Steven Spencer is currently long AA, BBBY, CROX, GM, KND, KNDI, XOOM and short KKD, KO, SCTY, ZQK