Advanced Trading Strategies: A Detailed Recap of Today's Delta Airlines and Tesla Trades

Today was an excellent day for trading, with standout performances on Delta Airlines (DAL) and Tesla (TSLA). Here's a comprehensive recap of the strategies used, the market insights observed, and the lessons learned.

Market Overview

The U.S. market gapped down due to job reports indicating stronger-than-expected job growth. This data raised concerns about prolonged higher interest rates, adding volatility to the trading session. Despite the broader market's decline, Delta Airlines' earnings announcement and Tesla’s intraday movements presented lucrative trading opportunities.

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Delta Airlines (DAL): Earnings Momentum and All-Time High Strategy

Delta Airlines' strong earnings report pushed the stock to gap up significantly, making it a prime candidate for a breakout strategy. Here's how the trade unfolded:

Market Context

• Pre-Market Levels: Delta was trading near $61 in the pre-market with a critical resistance level at its all-time high of $67.49 (recorded in December).
• Volume Indicators: Pre-market activity showed strong rejection at $67.49, setting up a clear resistance level to monitor during the trading session.

Trade Execution

1. Opening Setup

   • Delta opened slightly below the VWAP (Volume Weighted Average Price).
   • Following the "Claim of VWAP" strategy, I waited for the price to break above VWAP before entering a long position.

2. Entry and Risk Management

   • Entry: Entered around $66 after the stock cleared the VWAP.
   • Stop Loss: Placed a stop loss slightly below VWAP to manage risk effectively.

3. Adding to the Position

   • Upon confirming a bullish move toward the $67.49 resistance, I added to the position to capitalize on the breakout.

4. Breakout and Partial Profit-Taking

   • As expected, Delta broke through $67.49 with strong volume, reaching a high of $69.
   • Partial profits were taken along the way to lock in gains.

Outcome

The strategy yielded excellent results, with a substantial profit captured from $66 to $69. The key takeaway here was the importance of identifying and trading around significant levels, like the all-time high.

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Tesla (TSLA): Volatility and Reversal Patterns

Tesla presented another profitable trading opportunity, driven by its characteristic volatility. Here's how the trades played out:

Initial Setup

• Tesla opened the day down 2% amidst market-wide selling pressure.
• Initial strategy: A one-minute opening range breakdown (ORB) for a quick short trade.

Trade Execution

1. First Trade: Short Setup

   • Entered short during the opening range breakdown.
   • Stop Loss: Set a tight stop loss above the opening high.
   • Outcome: Got stopped out as Tesla reversed quickly, forming a double top.

2. Re-Entry and Reversal Confirmation

   • Re-entered short after Tesla confirmed a double-top pattern.
   • The stock then dropped from $392 to $384, providing an excellent risk-reward trade.

3. Managing Noise

   • Observed a large block trade at $377, causing significant volatility but without meaningful continuation.

Outcome

Despite the initial stop-out, the second trade yielded strong profits, highlighting the importance of persistence and adapting to market conditions.

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TNA: A Leverage Play on Market Recovery

In anticipation of a potential bounce in the broader market, I initiated a position in TNA, a leveraged product for small-cap stocks (IWM).

• Initial Position: 4,000 shares purchased.
• Strategy: Hold through Monday, expecting a gap-up to $220 based on oversold conditions.
• Additional Buy: Added 2,000 more shares, bringing the total to 6,000 shares.

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Key Trading Lessons

1. The Importance of Key Levels

   • Trading around significant levels like Delta's all-time high ($67.49) can provide high-probability setups.

2. Volume and VWAP as Indicators

   • Volume spikes and VWAP breakouts remain essential tools for confirming entries and exits.

3. Flexibility in Execution

   • Tesla's trades underscored the value of adapting quickly to market reversals.

4. Pre-Market Preparation

   • Identifying critical levels during the pre-market session ensures better decision-making during live trading.

5. Risk Management

   • Effective stop-loss placement and partial profit-taking are critical for capital preservation and profit maximization.

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Final Thoughts

Today’s trading session emphasized the importance of preparation, strategy, and adaptability. Whether it was Delta’s earnings-fueled breakout or Tesla’s volatile reversals, the opportunities were abundant for disciplined traders.