Crazy busy day with work will be up past midnight till Wednesday early AM….Two paper trades on Tuesday -.33 gross, -.36 net.
LNC-.10 LONG ~ Right idea as this stock made a +$1 move mid-morning but my entry was too early. I longed at the the bottom of the opening range – which I thought would act as support, instead it broke through it a .30 cent red five-minute candle, stopping me out. I did not enter on very low RSI (2) and nor did I follow my rule to get in after a tall green candle crosses back over above the 10 SMA on the 1 minute chart (after the typical morning pullback). More importantly, LNC crossed over $6.50, and typically at a threshold it will test that cross at least once. After it pulled back one more time to $6.50 that would of been a nice place to long all the way up to $7 at least.
EAT -.23 LONG ~ This one I simply chased, I bought on a tall wick that ended being the morning top. EAT broke through opening range support, and the bounce I chased would of been a perfect short entry (sell on the pop!)
Now if you look at the charts of LNC and EAT on a time frame above 5 minutes, they look identical. How am I supposed to know LNC is going to bounce and EAT is going to drop with the charts looking the same after both of them gapped up? There may of been a fundamental and/or a sector driven reason but I’m not sure.
Probably a better question would be: Will LNC bounce or fail at $6.50 and will EAT bounce or fail at $17 ~ and then act accordingly. Both those round price thresholds were around the bottom opening range support for both stocks. Both of them crossed these marks twice – LNC held above, and EAT below.
Anyway, I think stocks that gap up or down have some basic patterns that can be played once you learn the rhythms.
For Wednesday, some repeats: