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Gap up trend reversal - Earnings beat - VWAP Pull in - UAL - 18-1-23.pptx

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MaartenvanBemmel3

Strongest stock in the airline sector had strong earnings, gapped up, but reversed and trended down all day. A setup that I didn't recognize, but is definitely a setup that can be prepared in advance.

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Gap up trend reversal Catalyst: Earnings beat Setup: Gap up trend reversal Trades: VWAP Pull In Ticker: UAL Date: 18-1-23
Bigger picture: QQQ/SPY and VIX US CORE PPI: actual 5.5%, forecast: 5.6% (last: 6.2%). It measures the change in selling prices in goods and services sold by producers. It’s thought to be a leading indicator for consumer inflation. SPY: SPY was choppy above VWAP during the open and then trended down all day. VIX level : 20 VIX bounced and closed above 20. Ideal scenario for market plays.
Gameplan Checklist -For the setup, the key level is the potential top formed around 51,75. It fell below premarket. -SPY has been strong lately and reclaimed the 50SMA. But overall we’re still in a bear market. -SPY was extremely weak intraday which helps the thesis. -Setup: Gap up reversal: Extreme strength i) up 8 green days in a row, constantly higher highs and lows. All trend days. ii) Up 37% in 7 days. Most extended of the airlines. iii) Almost 10atr’s. iv) All on elevated volume. Also: v) 1 day where potential top is in = CHOCH on the daily. -Plenty of room to trend due to extended move. Potential to go higher/lower UAL Holding above/below key level? Yes Strong/weak market (bigger picture)? Medium Strong/ weak market intraday? Yes Strong/weak fundamental catalyst? No Strong/weak setup? Yes Elevated RVOL? Yes Room to trend on daily? Yes Room to trend intraday? Yes Trade2hold/thesis As the trade pulled into VWAP, SPY started to become weak. RVOL is high and the intraday price action is very weak; opening drive caused for a - 1.1ATR down move. This makes it a very strong setup, and given that the frontside had a lot of 1.75- 2ATR days, I should go big and aim for a for such a target as well.
Catalyst & Fundamentals Catalyst: Earnings beat Setup: Gap up reversal Premarket pre buzz: 8% Float: 325 million Institutional Ownership: 60,7% Short %: 5,49% ATR: 1,83. Average Daily volume (50 day): 7,9 million. Daily volume: 31,6 million. Gap%/Gap ATR: 3,9% / 1ATR RVOL: >5
VWAP Pull In- Bearish Trade2hold – Trade Management Trade2hold - Flat Significant 5m close above 20 EMA: 1) close on above average buying volume; 2) a new 5m high that occurs after close; Goal: don’t sell more than 50% when going flat. Reason2hold -Shallow volume and making lower lows. Sometimes the trend is still intact when there’s a significant close above the 5m 20EMA. Trade2hold – Core Exit strategy Measured move: 2ATR target. Don’t sell you’re core at this target if there’s not a reason2sell. 5-10% partials near the bottom/LOD’s when price is stalling out. VWAP entry. Try to enter as close as VWAP as possible once price reclaims the 1m 20EMA. Reasons2cover -Significant buying volume on 5m. -Unable to make a new low on low volume. Double top. -Time. It’s almost closing time (15:45) and we are near LOD . Good to take some profit.
Technical Analysis: Daily and Hourly Extreme strength i) up 8 green days in a row, constantly higher highs and lows. All trend days. ii) Up 37% in 7 days. Most extended of the airlines. iii) Almost 10atr’s. iv) All on elevated volume. Also: v) 1 day where potential top is in = CHOCH on the daily.
Key levels: Potential top on Daily
Trade management This chart is a prime example of extreme weakness. There is absolutely no reason2sell until price hit the LOD, when there’s increased buying volume.
Technical Analysis: VWAP Pull In False breakout candles. Shallow volume during consolidation. Increased selling volume when price breaks down VWAP.
What could I have done better? ? I have improved my pre-market routine by adding another checklist. This gives me a better idea of all the potential stocks in play. But I still need to go more in depth using my old checklist. This will get me better prepared. I was a bit clueless about the potential setup that were available. I should do at least two stocks in depth, preferably D1 setups with a fresh catalyst. Had I used my second checklists properly, I would have perhaps identified the potential for a reversal based of scanning for similar setups on the daily chart. ? I have added this new gap up reversal setup to my playbook. It’s the opposite setup of the gap up/down bounce day on TSLA. I want to see extreme strength first and look for a reversal/capitulation play. Next time I see a daily chart like this I should be prepared for a potential reversal!

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Gap up trend reversal - Earnings beat - VWAP Pull in - UAL - 18-1-23.pptx

  • 1. Gap up trend reversal Catalyst: Earnings beat Setup: Gap up trend reversal Trades: VWAP Pull In Ticker: UAL Date: 18-1-23
  • 2. Bigger picture: QQQ/SPY and VIX US CORE PPI: actual 5.5%, forecast: 5.6% (last: 6.2%). It measures the change in selling prices in goods and services sold by producers. It’s thought to be a leading indicator for consumer inflation. SPY: SPY was choppy above VWAP during the open and then trended down all day. VIX level : 20 VIX bounced and closed above 20. Ideal scenario for market plays.
  • 3. Gameplan Checklist -For the setup, the key level is the potential top formed around 51,75. It fell below premarket. -SPY has been strong lately and reclaimed the 50SMA. But overall we’re still in a bear market. -SPY was extremely weak intraday which helps the thesis. -Setup: Gap up reversal: Extreme strength i) up 8 green days in a row, constantly higher highs and lows. All trend days. ii) Up 37% in 7 days. Most extended of the airlines. iii) Almost 10atr’s. iv) All on elevated volume. Also: v) 1 day where potential top is in = CHOCH on the daily. -Plenty of room to trend due to extended move. Potential to go higher/lower UAL Holding above/below key level? Yes Strong/weak market (bigger picture)? Medium Strong/ weak market intraday? Yes Strong/weak fundamental catalyst? No Strong/weak setup? Yes Elevated RVOL? Yes Room to trend on daily? Yes Room to trend intraday? Yes Trade2hold/thesis As the trade pulled into VWAP, SPY started to become weak. RVOL is high and the intraday price action is very weak; opening drive caused for a - 1.1ATR down move. This makes it a very strong setup, and given that the frontside had a lot of 1.75- 2ATR days, I should go big and aim for a for such a target as well.
  • 4. Catalyst & Fundamentals Catalyst: Earnings beat Setup: Gap up reversal Premarket pre buzz: 8% Float: 325 million Institutional Ownership: 60,7% Short %: 5,49% ATR: 1,83. Average Daily volume (50 day): 7,9 million. Daily volume: 31,6 million. Gap%/Gap ATR: 3,9% / 1ATR RVOL: >5
  • 5. VWAP Pull In- Bearish Trade2hold – Trade Management Trade2hold - Flat Significant 5m close above 20 EMA: 1) close on above average buying volume; 2) a new 5m high that occurs after close; Goal: don’t sell more than 50% when going flat. Reason2hold -Shallow volume and making lower lows. Sometimes the trend is still intact when there’s a significant close above the 5m 20EMA. Trade2hold – Core Exit strategy Measured move: 2ATR target. Don’t sell you’re core at this target if there’s not a reason2sell. 5-10% partials near the bottom/LOD’s when price is stalling out. VWAP entry. Try to enter as close as VWAP as possible once price reclaims the 1m 20EMA. Reasons2cover -Significant buying volume on 5m. -Unable to make a new low on low volume. Double top. -Time. It’s almost closing time (15:45) and we are near LOD . Good to take some profit.
  • 6. Technical Analysis: Daily and Hourly Extreme strength i) up 8 green days in a row, constantly higher highs and lows. All trend days. ii) Up 37% in 7 days. Most extended of the airlines. iii) Almost 10atr’s. iv) All on elevated volume. Also: v) 1 day where potential top is in = CHOCH on the daily.
  • 7. Key levels: Potential top on Daily
  • 8. Trade management This chart is a prime example of extreme weakness. There is absolutely no reason2sell until price hit the LOD, when there’s increased buying volume.
  • 9. Technical Analysis: VWAP Pull In False breakout candles. Shallow volume during consolidation. Increased selling volume when price breaks down VWAP.
  • 10. What could I have done better? ? I have improved my pre-market routine by adding another checklist. This gives me a better idea of all the potential stocks in play. But I still need to go more in depth using my old checklist. This will get me better prepared. I was a bit clueless about the potential setup that were available. I should do at least two stocks in depth, preferably D1 setups with a fresh catalyst. Had I used my second checklists properly, I would have perhaps identified the potential for a reversal based of scanning for similar setups on the daily chart. ? I have added this new gap up reversal setup to my playbook. It’s the opposite setup of the gap up/down bounce day on TSLA. I want to see extreme strength first and look for a reversal/capitulation play. Next time I see a daily chart like this I should be prepared for a potential reversal!