Earnings season dumper trading

Earnings
season is in full effect now. 
This is our FAVORITE time of the
year.  As earnings come out we always get groups of stocks that gap up strong or
dump down strong.  The basic play on a dumper that gaps down is to wait out the
3 minute 5 period simple moving average and then short the rejection if the 1
and or 3 minute stochastics slip back down.  This is called an inverse pup
breakdown. 

 

On July 25th,
2006,
(
NTRI |
Quote |
Chart |
News |
PowerRating)
gapped down very hard on disturbing news of the COO leaving
the company.  We waited for the 3 minute 5 period moving average to close in on
the stock’s trading price.  This usually takes 10 to 15 minutes after the open. 
Once the 3 minute 5 period ma rejected, we stepped in SHORT
(
NTRI |
Quote |
Chart |
News |
PowerRating)
at
9:48am as the 1 minute stochastics crossed back down reversing the upward
momentum.  NTRI sold off very fast as all the bottom catchers panicked out for
us to lock into the sellers at 57.80, out + 1.20

 


 

These 3 minute inverse pup dumper
breakdowns are one of the key setups in earnings season.  For more setups, feel
free to check us out.  Good trading!

 

Feel free to send any questions
or comments to
jay@undergroundtrader.com

 

Jea
Yu has been involved with the equities markets for over 10-years. He specializes
with intraday trading in the U.S. equities and futures markets. To receive a
free 7 day trial to Jea Yu’s Underground Trading Pit,

click here
or call 888.484.8220, ext. 1.