Here’s One Way To Trade A Breakout
General Motors (GM)
gapped up at the open on the news Kirk Kerkorian made a cash tender
offer for up to 28 million shares of GM common stock at $31 a share.
10:01:25 (from TradersWire)
|
Action |
Symbol |
Order Type |
Setup |
Stop |
 Target |
Current Price |
Posted By |
|
Buy |
GM | buy stop at 30.72 | challenging intraday high |
30.57 | 31 | 30.60 |
TK |
As you can see below, GM opened above the upper
Bollinger Band. Normally this kind of strong momentum is not sustainable. I
waited for the stock to pull back toward the middle band, but it began to form a
trading range. It was a potential breakout situation. I placed a buy stop just
above the upper boundary of the range.
10:12:54
Follow up on GM
Sell half to take a 12-cent gain. Move stop to breakeven.
10:14:50
Follow up on GM (pt 2)
It has hit our target. Sell the rest, or adjust your stop.
If you have questions, feel free to
mail them to me.