Strategy Description: This is very similar to the trade on ONTX on Friday in that it showed the weakness in the premarket. The general idea is that you want to short with risk against the premarket high. You should be somewhat prepared for a pop on the open; however the fact that it has shown some weakness suggests that it won't have an enormous pop off the open. For example AVEO was holding a descending trendline, whereas ONTX was trending up after a big initial move around 7am (thus ONTX likely to have more of a pop than AVEO).
I will include a chart of ONTX just for reference.
Now I messed this up. I got a little uncomfortable about the consistency of the premarket downtrend and thought an opening pop could spell a big break. Hindsight I was a little uncomfortable because I had on approximately 2/3s of the position I wanted and it was still technically on the upside. What I should have done is covered half or so and looked to reshort.
Now I just wanted to touch on something that I completely missed. Now usually I love shorting the morning parabolic pops and then loading up size when they fail and create the overhead supply. Now that is obviously the perfect scenario. You need to be prepared for the first move to be down. Now remember that the first move being down is somewhat of a confirmation so it is okay to short at these lower prices. You want to be closely watching the 5 second or tick chart and look for a failure after that first move being down (5 sec chart attached). That's the sign that you can get in. You probably only want to add/enter half as risk is a little less well defined. However that is still the entry ticket! You can see that it was still similar mechanics as the other parabolic ones, just not as nice! The ideal situation is to be short half premarket and then add the half on the failure for these ones. Obviously you don't know what it's going to do, so it's about maintaining a balance when you can define you risk.
As for the rest of the play it is just the same mechanics, hold some until end of day for lows.
AVEO Intraday:
AVEO 5 Sec:
ONTX:
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