Here’s Another Way To Trade An Opening Reversal
When a stock is “acting up”
against its sector, it could be time to consider a different kind
of Opening Reversal. Most
people associate an “OR” with stocks that will trigger contra to the early
morning gap as it trades through its opening range and back into the gap. This type
of action typically happens during the first 40 minutes of trade. But, the
opening reversal can also be used as a continuation pattern if you know what to
look for.
In the case below, Rambus was up on the day,
bucking the semiconductor HOLDRs
(
SMH |
Quote |
Chart |
News |
PowerRating), which were being weighted
down on news out of Maxim Integrated
(
MXIM |
Quote |
Chart |
News |
PowerRating). Since during the first
few “bars” of trade, it is difficult to discern an actual pattern, unless
there’s one continuing from yesterday’s trade, I like to use the consolidations
that define Opening Reversals as a way to enter a stock in the direction of the
gap when I see technical evidence in “support” of the stocks early action.
09:56:07
Intraday
Setup Alert
Rambus (RMBS)
will trigger an Opening
Reversal continuation long, above 18.50. The stock is up .56 at 18.49.
Today’s trade has the issue about .25 from two pivot highs that are .10 apart on
the daily time frame as it has consolidated its most recent gains.
Of course, if a stock continues to act up, you
can always use the tried-and-true Slim Jim, or his cousin of consolidation, the
infamous Triangle.