A Classic From Start To Finish
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There’s no better way to get off to a
fast start in the right direction. It’s called an Opening Reversal. The most
typical way for this strategy to play out, is by trading against the
direction of the opening gap as the stock takes out pattern support or
resistance. It’s all in a day’s work, or in this case 15 minutes or so.
In UTStarcom
(
UTSI |
Quote |
Chart |
News |
PowerRating) this morning I
put out a post in the TM
Chat, for potential short entries if UTSI could take out its opening bar
lows. Very shortly thereafter, the stock broke support, and started to fill the
bullish price gap. This is a typical example of the strategy, as we look to
profit in a stock by taking advantage of early, over-emotional support due to
company specific or general market news. In this case, it was company specific,
which does entail greater risk than just overall market enthusiasm. I personally
still look for entry in these more aggressive moves, as long as I feel confident
about being able to quantify my initial risk on the trade. With UTStarcom, we
had plenty of liquidity, and a tightening contraction within the wider Opening
Reversal range for which to place a money stop, if the trade went against us.
10:16:00
Intraday
Setup Alert
UTStarcom (UTSI)
was good for a very quick 1pt. move out of an Opening
Reversal that was posted in the TM chat. The stock is now consolidating at
lows, inside of the bullish gap area. Possible continuation shorts will trigger
below 39.80, with the stock up approximately 2pts. at 40.
…and then the classic breakdown out of a
consolidation pattern which took the shape of a descending triangle. Another
quick thrust down followed, with the counter-trend rally then finding resistance
at the second entry area. Very nice, but then UTSI decided to really help out
anyone still holding short, by establishing a 1,2,3 reversal long at 39.25. This
was alerted to in the chat room as the 3 pt. had formed. Maybe Kevin didn’t
get to say it on this particular trade, but I know that I couldn’t help but
think, ‘sometimes it really is too easy’ as UTStarcom played itself out.
Chris Tyler
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