$LTRN:  1/26/2025 - % gainer on thelion.com

Checking out the daily chart.

On the daily chart, I saw that this stock ran for multiple days with abnormal volume and volatility in March 2024.

Because Tim Sykes keeps reminding us to use all the tools at our disposal, I decided to check out the Challenge Chat room and entered this ticker.  I found some comments by Himmeny and Androo.

Looking at the chart of $LTRN for 3/18 and 3/19 and combining that with their comments, gave me a light bulb moment regarding a stock's behavior in AH/PM and how it affects r/r of a potential trade.

Looking for FGD setups, I was already mindful of the play being harder when the stock makes the r/g move in PM - as Ellis explains in many of his webinars - but it took these comments to really turn the light bulb brightness to level 11.

 

$LTRN  -  Challenge Chat 3/18-19/2024

 

 

 

“They are going to ruin the short setup by gapping down too much”

 

“Fail before giving any short entry with decent r/r”

 

 

 

If you are looking for a short and the stock gaps down a lot (AH/PM)

 

-          Some of the move has already played out – the downward range has gotten smaller from the new price point

 

-          If you would enter a short trade after gap down, your entry is no longer near the ideal risk level – being g/r or previous day’s HOD  when you are looking for a FRD gap down short

 

-          If you would short the stock after it has gapped down, it would be like shorting the stock “mid-range”

 

o   Risk would be higher as you are further from ideal resistance level (your entry should be as close to risk as possible)

 

o   Reward would be lower as you are closer to the next support level (your goal)

 

o   Part of the move has already played out so no longer ideal r/r

 

 

 

In this case, you have to wait for the stock to bounce back, closer to the g/r  or previous day’s HOD level for a better risk/reward entry, being mindful of the time of day and when you expect move to happen.

 

If stock does not bounce: stock fails before giving you any short entry with decent r/r and you should not be trading stock

 

 

 

Note on the long side

 

EH does not like it when he sees a stock go r/g in PM when looking for a FGD setup.

 

-          When stock goes r/g in PM, some of the move has already played out – the upside range has gotten smaller from the new price point

 

-          If you would enter a long trade after a gap up, your entry is no longer near the ideal risk level – being r/g when looking for a FGD setup

 

-          If you would long the stock after it has gapped up, it would be like longing the stock “mid-range”

 

o   Risk would be higher as you are further from ideal support level (your entry should be as close to support as possible)

 

o   Reward would be lower as you are closer to the next resistance level (your goal)

 

o   Part of the move has already played out so no longer ideal r/r

 

In this case, you, you have to wait for the stock to pull back, closer to the r/g level for a better risk/reward entry, being mindful of the time of day and when you expect the move to happen.

 

If stock does not pull back and keeps spiking at the open, you should not chase the spike as the stock is not giving you an entry with decent r/r and you should not be trading the stock.