Strategy Description: Everyone knows that float rotation means shorts should be in trouble and enormous squeeze is on the cards. Right? So what happens when a stock has float rotation, but just gaps far too far so that even no chasing suckers will buy it (beyond the original push that is). Typically you should be thinking >50% gap for this kind of idea. Of course this will depend on the price of the stock.
Stock will be trading very very heavy volume in the premarket, and the on the opening candle it will push up on enormous volume (in this case it did nearly 1/3 of the float in the first minute or so). Begin shorting into this, with patience for entry and anticipate the spot. It probably won't push too far beyond the premarket highs. Round numbers over/under can work out nicely (as in this case). Naturally manage position to cover risk.
Now when the stock begins to hold below vwap over/under the conviction level amplifies a lot! This means that every person who bought on the day is now under water (on average), and so the stock has a different driver. Note that the premarket inclusive vwap will be different to the vwap for the day, so just keep an eye on that. From there short all pops and expect a fade for the entire day. Note that it can rebound in days later, but for the day it is overdone.
No comments:
Post a Comment