Strategy Description: This is by no means a "buyings are occurring so buy the stocks". It is a recording of a pattern and the bias it can gives to trades.
I found out this the other day when some people experienced a nasty buyin. Buyins occur by default using a strategy around vwap, it is not just a market order. So bringing this into context, when a stock goes reg-sho at some brokers and they have buyins you want to monitor the strength of the stock, and should something occur become bullishly biased.
Bigger Picture: Trades where this occurs are unlikely to be stocks that are influenced by the market.
Intraday Fundamentals: GENE has a float of approximately 3m shares. It is an ADR that also trades in Australia. My impression is that a lot of traders have been short biased by the fact that the Australian listed stock plays catch-up with the US version. They assume that Australia leads the ADR (which makes sense) if you didn't understand that all the volume and liquidity comes from the US, and therefore the ASX version follows the US (although no doubt it drags it down a little).
It had a secondary recently which I suspect biased shorts even more.
Technical Analysis: It is extremely clear looking at the daily that GENE is a little stronger than it should be (by which I mean it is holding instead of fading off). This is indicative by the volume, and the retest of the high. This isn't enough to create a bullish bias, but it tells a story that shorts aren't safe.
In the morning vwap was hanging around the r/g area. The price was then supported by vwap all day. This is key, because of the algorithms trying to fill around vwap. Just to really illustrate this have included an intraday chart with vwap.
Reading the Tape: There are some very key spots to identify on the tape. I wasn't watching this, but the first that comes to mind is that spike into green. It is very important that this comes with high volume, and some clear buying on the tape to allow you to chase (ideally an add). This is important because buying news highs usually won't work with a stock like this.
Trade Management: Again, the way this stock is trading doesn't reward buying breakouts.
Initial trade buying into the washout near $3.50 support on daily. Don't add until confirmation on tape as above.
From here sell rips and buy dips into vwap.
The other thing that is important to note is that going below vwap wasn't a signal to get out. A "hold" below vwap was, so don't be trigger happy. Or have a hard stop below recent swing (and below vwap).
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