You can find gap and panic setups by looking for the big red candle on day 1. These earnings winners gap up and sell off before forming the base in which to swell into a multi day retrace. These plays tend to reward the patient by offering a low risk breakout opportunity above the day 1 high. Here are a few gap and panic plays from this quarter:
$RUBI
$AMPH
$GERN
$PSUN
$TUBE
$MAGS
Price action is a general term that refers to the fluctuation in stock price.. Once you identify chart patterns that consistently repeat, you can combine observations of lvl2, time/sales, and the live chart to recognize the buying and selling action that leads to the fruition of a setup.
Earlier this week $RLGT’s chart began exhibiting signs of a setup in my strategy. In secondary breakouts, I look for a stock that has recently had a good reaction to earnings, and is breaking out above the high from its initial run.
For $RLGT, the high from the initial run was $4. Here’s a daily chart:
You can see on Monday the 6th, it started breaking out.. That’s when my E*Trade Pro alert went off, and I started watching the stock for specific characteristics in price fluctuation. I like these setups to exhibit the following price action:
Earnings winners are inherently volatile.. offering a nice range of emotion, price, and spikeability. Due to their choppiness, support and resistance levels aren’t an exact science, but they do provide a predictable price channel to trade in. This is how I make money “in between” earnings seasons. Simply buy near the bottom, sell near the top.
$VDSI
$BDR
$CALD
$MAGS
$PLNR
I was just watching a string of Sykes’ recent video lessons, and came across a little golden nugget. Some of his best lessons come from big losses, and that’s where I found him talking about how to achieve success in the markets.
1946: How To Get Over Big Losses Like Mine On $HGSH
by timothysykes
Think about each one and what it means to you and your strategy. When 90% of traders lose money, do what the 10% do.