MW foreshadowed its strength today on the tape.  I used what I saw on the tape to confidently trade a difficult subset of an accumulation play in MW today.  Let’s discuss.

As usual there was the “Bella what are you trading?” peppered in my direction before the open.  My standard response is to subtract how many minutes there are until the open and then let the questioner know I will have an answer in however many minutes there are till the open.  So at 9:13 AM my answer was,”Not sure yet.  I will let you know in 17 minutes.”

I kept looking for the best stocks to trade.  AMZN…..no.  AAPL….no.  MW…hmmmm.  At 9:29AM I announced over our audio feed: “I am trading MW.”

Right on the Open the buyers alerted me to their big order.  Offers were cleared.  Offers for 5-10k shares were cleared without a care.  MW traded up quicker and steeper than I expected.  Alert the players our opportunity is here.

I talk a great deal to our developing traders about learning the subsets of trades.  The easy trade that everyone can handle is the momentum trade, with an opening drive.  But we did not get that with MW.  MW would still trade near the highs of the day but just not with an opening drive pattern.  There was a different pattern with a challenging subset.

For the opening drive pattern 19.25 would have stuck the bid and we would have found 20 before 10:30AM.  But the buyer(s) had another idea.  These buyers were practiced in nuance.  They turned off their aggressive buy program, with all their macho clearing of the offers followed by high bids, and let MW drop.  Weaker traders would have assumed that was the end of the buy order and there was nothing left out of MW on the longside.  To me I spotted just a subset of a terrific trading pattern.

I spotted the accumulation pattern.  MW was still strong.  The buyers just were being patient.  They did not want to tip their hands.  They wanted MW as close to 19 as they could for as much size and they could get. Passive algo buy programs, mixed in with periods where they were turned off, made the stock look weaker than it was.

The old passive algo mixed in with the turning off of the algo worked very well at 19.10 and then 19.  Short term buyers such as myself whacked the bids to exit.  But when MW didn’t really go down so I reentered.  I saw what I saw.  This was just an accumulation pattern with sophisticated buyers leading the way.  For me it was just a matter of time before MW would find 20.

I rose from my trading seat, walked over to pretty boy Alexander James (he never takes a bad picture, wakes up at 5 every AM to do some workout way too difficult for this ex athlete) and offered this alert for our SMB Intraday Alerts: Buy MW at 19, stop below 18.89 and target 20.  (I know who is better than me.  Talk about nailing a trade.) 🙂

I understand those who were frustrated that MW did not break out for an opening drive.  I get that below 19 was an exit and a difficult rebuy.  But this was just a subset of an excellent opportunity that we see day after day, month after month.  Ain’t nothing but an accumulation play, with a subset rebuy after the held support drops but reappears.

But we knew all this by watching the tape right on the open.  The foreshadowing of strength enabled me to rebuy and hold MW with conviction to near 20 where I exited.

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