This week's lesson.
Today I want to go over the momentum and breakdown of some multi-week runners.
We’ve recently been trading a lot of micro float that show reverse splits and gap-ups in the pre-market. These patterns are unpredictable, especially when they don’t have enough resistance.
$ADIL doesn’t have a history of resistance and was a stock I skipped over when seeing the morning push feed back down with no panic.
$ADIL doesn’t have a history of resistance and was a stock I skipped over when seeing the morning push feed back down with no panic. There was pressure to sell, which resulted in a random mid-day gap up before it continued to fade. Even though I didn’t play this ticker, I can still recognize momentum when I see it, and if you wanted to pursue this, then the $5 area would be the place to short. However, you would need to be consistently watching, and I figured it wasn’t worth that. $ADIL reinforces the negatives on trading the front side because volume here means there’s no resistance, and you have nothing to risk into.
$AQLA is a different story when we see the morning push 100%…
$AQLA is a different story when we see the morning push 100%, making it a pre-market breakout due to a 20-50% gap-up with accumulated volume. I took around $50,000 in profit by the end of the day because the attempted mid-day spike failed and broke the momentum. Always use the charts when planning your moves, and don’t get rushed when seeing a fresh chart. You want to use history to your advantage by learning the resistance, volume traded, how many backorders are there, and whether to go long or short.
I want to move on to $ASNS, which people bought as a multi-day breakout, and should trade just as that.
Because it’s a multi-day breakout, any intraday action shouldn’t shake you; however, we see $ASNS going parabolic, leading to bad odds. A breakout should hold a consistent support level throughout the day, but parabolics pull back and cause a fake-out that starts a chain reaction of people selling their position. We can use $ASNS as an example for overstaying gap-down as well. People tend to use yesterdays close, but different scenarios can form when these gap-downs don’t have a consolidation resistance or enough volume traded.