Thursday, September 18, 2014

Setups continued

Good morning folks, 
Path to Profitability tab is on the home page now with a link to the webinar with Kunal Desai in case you missed it.


Gaps
Gaps occur on daily charts and are typically created by some type of news event that creates an imbalance of buyers and sellers prior to the market open. Gaps can also occur mid-day if a stock is halted pending news and then reopens for trade. If the news is good you get a gap up if the news is bad you get a gap down. Earnings, FDA approval or failure, upgrades downgrades, potential sale, or guidance updates by companies can all have a gap effect. Once again volume is a key indicator in determining the strength of the gap.   

Gap and Go
Figure 15 Gap Up with continued follow through





Gap and Fade
Figure 16 Gap Down and Fade


Depending on your style and the time frame you are trading in, Gap trades can vary. If you are a day trader you may be looking to play the gap at the first sign of a reversal candle accompanied by volume for either a bounce or a fade. If you are a swing trader you may want to take a position after a failed attempt to fill the gap. If you get a gap up or gap down through a significant area of resistance or support it is likely the direction of the gap will continue. Look for the price to test that area for a potential entry.
 
Gap fills

Often times the gaps that are created on daily charts will experience what is called a gap fill. Sometimes they can fill in the same day and sometimes it can take days or weeks to fill. Not all gaps will be filled as it depends on what type of gap it is common, breakaway, continuation or exhaustion gap. Where these gaps occur in the chart pattern will help you identify what type of gap it is. To learn more about the types of gaps you can research them online.  As I indicated earlier Gaps are usually accompanied by some type of news or fundamental event. People have a tendency to overreact to these events with their own misinterpretation of how significant the event is in terms of price action resulting in overshooting on the upside or downside, irrationally pricing the stock temporarily. When a stock gaps it often loses its technical support and resistance and needs to reestablish the point of its gap up or down as its line of support or resistance.


Figure 17 Gap Fill to support

Here are a few of the stocks I am watching this morning. 

 Day Trade Radar
XXII VRNG MOBI HNSN CX EMKR  ROSG EPIQ VVUS  a couple of these can be pop and floppers so be careful 
WYY already in my long term hold account but could also be good for a day trade
RBIO IPO BABA IPO
BAXS putting itself up for sale 

Solar's could be in play

Swing Trade Radar
CY will wait for cramer effect to end  SIRI  RAD seeing some weakness off earnings watching the dip 

If you are interested in getting my trades entries and exits REAL TIME for both day trades and swing trades sent to you in email and in text . You can join me @ the Stock Aviator chat room. It is a paid site and if you use this link https://www.stockaviator.com/79-90-a-month-for-premium-membership your first 30 days will be at a discounted price of $79.90. After your initial 30 days it will be $99.00. I recommend trying out the free 14 day trial.

I encourage people to take their own trades with their own setups.

However, chat rooms are great for idea generation and learning the style and strategies of other traders. If you sign up say hello and let me know in the chat room. My handle is "Vegastrader66" I will walk you through how to get set up for my email alerts.



Best of Success!