4/19/2020

Posting this for myself but also if anyone knows what this pattern is and where I can find more examples of these in the video lessons.

 

I have been profitable keeping track of these trades and I am currently going through YouTube to learn how to properly track trade setups. If anyone reading this knows the name of this pattern please comment below.

 

The Setup:

After a big runner/supernova peaks and goes red for a few days, I am looking to buy the first green day bounce once the stock as reached a support level and finds a "bottom". This bottom won't act as a permanent floor in my mind, only a level that should reverse the red trend and go green on the day.

 

What I look for:

> Big supernova-like move 

> Quick nasty red fade for the next few days: (2-5 days)

> Stock hits a hard support level (could be former resistance in the chart) almost near where the             stock was trading before its massive squeeze(s)

     *the faster and higher it spikes up and down, the faster and higher the bounce is on the day*

> A few days of red with the volatility on the day slowing down looking for that Red > Green             move day. Usually the first green day the stock has had since the initial crack.

> Have seen them bounce 20-50% on the day. 

> Usually fades continue the following days, but I don't care because I'm just looking for that bounce.

 

Why I like this pattern:

> Great for beginners like me:

     1) Easy to spot: after a supernova > crash move has happened.

     2) Risk is low: you can just risk off the low of the day or where the stock seems to be holding up.

     3) Teaches me to make a watchlist with criteria and plan my trades days ahead of time. Will move             stock out if it's not sticking to the pattern.

     4) I can watch the run-up of these stocks while they're going supernova to learn the stocks:                      * "personality": where it had trouble breaking out (bag holders)

            * Chance to learn the upside of the move (bullish indicators) and can study strength,                                breakouts, sideways price action above VWAP and closing near its highs, etc.

            * Chance to learn overextension and when a Supernova might be turning to the backside of                      the move. (useful if I ever want to get into shorting)

     5) It doesn't happen often so if I can be patient and stick to my plan I can avoid overtrading and                 losing on unnecessary trades I don't understand. Giving me more time to study.

            * Helps with PDT and secured/unsecured funds (cash accounts) to not break PDT/GFV

 

How I Will trade them:

>   Add supernovas to my watchlist and study them as they run>crash.

>   Wait for the consolidation to near its former resistance levels, observe how it acts.

>   Wait for volatility/volume to slow down and when the stock looks to be reaching a bottom

>   Potential buy indications the stock has bottomed and will bounce:

         * Stock has significantly reduced in volatility/volume after 4-5ish red days in a row

         * Has bounced/held a key support level (former long term resistance, initial breakout level                        before the squeeze) for the entire day.

         * Trending sideways above VWAP for the first time since the initial red-day crack.

         * Stock has news: (good news or announced a completed offering)

>   Set risk at a key support level and respect at all costs. Choose a risk that would completely                    dissolve your thesis on the day/chart/move.

>   Can buy and hold overnight if the stock reaches near end of day and has been trading sideways            above VWAP while holding a key support level.

                                                  *Sell into morning spike*

 

>   Can buy into massive MASSIVE morning panic if the panic reaches a very strong, long-term support level

                                                   *Sell into bounce spike*

 

Things I will Avoid:

>   Trading the first 15-20 minutes of the day (unless supersuper morning panic).

>   Trying to guess the bottom (let the stock show me the bottom formation)

>   Trying to buy the "intraday breakout" on the bottom day if I have missed the initial bounce.

          *if stock has already bounced big in the morning/mid-day it usually has already run its course*

>   Buying near the top of the sideways channel, unless its end of the trading day.

>   Buying before establishing a risk level

>   Not respecting risk level

>   Trading a pattern that is choppy, not clean, or gapped down massive due to bad news.

 

 

Examples of upcoming patterns as of 4/19/2020:

$AKER $BIOL $USWS $ICD

Examples of past moves: [ticker-date]

$BLPH - 3/25/20

$WTRH - 3/19-21/20

$ASTC - 4/2/20

$SGBX 4/9-14/20

$BIOC 4/17/20