U.S. Steel Corporation (X) recently gapped up on earnings breaking through an area of resistance between $30.00 – $32.00 and has been unable to clear this area since 2011.
GAP REVIEW
On July 30, 2014, X gapped up taking out the supply zone mentioned above into $32.00. The stock traded over 28 million shares which is seven times its average daily volume and closed near the highs showing hints of institutional buying for bigger returns.
KEY LEVEL
Prior pivot high of $31.00 and gap down low of $31.00 give us a clue that there should be demand there. We will want to use that area as our risk line. If the stock trades below $31.00 we want to take our risk off and close out the long position. The next area of supply is around $40.00 and we will use this area as our first target.
THE TRADE
This trade has already executed on 7/31/2014 but this a good reference on how to swing trade gap ups. In hindsight I called a long over 7/30/2014 highs at $33.50 and a stop at $31.00. Look for a target into $40.00.
TRADE LESSON
Notice how X made a new high on 7/31/2014 and the SPY sold off and closed at the lows. You want to pay attention to the stocks that move against the market as they are clearly on their own page. Four days after the gap up X is still making new highs.
Disclosure my Swing Newsletter Subscribers took this alert on 7/31/2014
