What do you do when you’re up 15% in a day? Why, you protect thoss profits! Here’s how we’re doing it on $CLF. (June 09, 2021)


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I want to talk about Cleveland-Cliffs ( NYSE: CLF ) today. You can see the stock broke out today, big time. Yesterday I got our people in here, I saw what was going on, this isn’t a, yay, look at me. That’s stupid, if you are going to do that you have to talk about your losers too. I just want to explain what we did here.

I have been watching the steel stocks for a while. A lot of them are looking pretty good; you look at U.S. Steel ( NYSE: X ), you look at ( NASDAQ: STLD ), you look at this ( NASDAQ: ZEUS ). You can even look at some of the other stocks ( NYSE: TECK ), they are all ( INDEXDJX: DJUSST ) just kind of looking pretty strong.

That takes me back to Cleveland-Cliffs ( NYSE: CLF ). What I do, by the way, in choosing a stock like this when I say the whole industry, the whole sector is good, the first thing I do is not go look at the fundamentals, not these days. The first thing I do is just look at the chart. I will compare all the charts and then find the best one. If I see a good setup then I will take it.

The reason I liked this setup was, we are in here at 20.10 yesterday and I could drag the stop just below the 50-day moving average and I got a 6 percent risk. That was basically what I did, so I got a 6 percent risk. Now today, from that 20.10, now the stock is actually up 14-15 percent. So already my reward is over twice what I risked. I am risking 6 percent to get in the trade, now I am up 14 percent, almost 15 percent, so that’s a pretty good do.

This is a good trade going but it’s a volatility squeeze so I don’t just go, oh, I’ve got to take profits, look at the price here. What I am doing, you may think this is kind of silly but I am actually just raising the stop to break-even. That’s all I want, is just to lock in a break even on the trade. I have got to give this more room to work because this is massive volume. So there is absolutely institutional buying. You don’t get 90 million shares by the wallstreetbets guys.

So this institutional buying but you are also going to see this situation unfold, where they’ll say, well, it’s up 14 percent I am not going to keep buying it tomorrow, so I will take my foot off the gas, see if the stock can come in, and then maybe we will buy a little bit more down around 21.00 or even 20.00 for that matter. I need to play for that kind of move. So I have at least taken break-even out of the trade.

If you want to, you set staggered stops, I think there should be no stops set below your entry. If you are up 14 percent on the trade, frankly, that trade should be a winner, it shouldn’t even be a break-even. I am just kind of taking this slow, and tomorrow, for our members, I think we will probably end up setting some staggered stops just to make sure that if the stock does retrace we can be locking in some gains.

So look, if you want to make big money you have got to let your positions work. If you don’t, if you are hyperactivity trading all the time you are never going to make big money because you are not giving the stock enough time to reward you.

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