When I first started day trading back in 2001 I told myself I am a pullback trader and will never consider buying the highs and look to sell higher. Over the years, I have evolved into a trader that does buy high and sell higher. There is a method to the madness in buying high and selling higher. I am going to go over a stock that I called live to my Twitter Followers on October 7, 2014.
The Stock Play
News stated that CalAmp (CAMP) was sharply higher after the mobile networking equipment company reported fiscal second quarter earnings that topped analyst forecasts. The news reported was positive and the stock acted along with the news, however, I needed a little more information on how it was going to open on the gap up so that I could see if there were any willing buyers to give it a good run. I always tell myself, “I don’t have to be the first trader in the trade to make money.” I like to wait and see how the stock is going to trade near the open and the first thirty minutes gives me a good gauge to see if I am willing to give it a go.
The Action
CAMP ran for the first ninety minutes of the day running from $17.80 to $19.94. I knew a lot of traders made good money on that run up and would cash out. I also saw a fifteen minute sell setup pattern forming and knew that some traders would try to take her down and may get trapped. I was thinking that traders could get trapped on the short side and I could get long and those were good odds for me. Also in alignment I saw that the stock had room to run another dollar on the daily chart until it hit a solid wall of supply. So I let the stock take out the high of the day at $19.94, then I wanted to see it hold that level and that was good enough for me to get in long. I alerted my Twitter Subscriber followers of the trade.
CAMP Trade Long Alert
Long at $19.95
Stop at $19.50
Target into $20.80
A Trading Edge For You
The rest is history. It had a great run close enough into our target and we trailed out as it pushed up. I like buying stocks that prove themselves to me with strength. Buying high and selling higher with gaps can be a new edge to your trading toolbox.
