Earnings Gap Ups Everywhere
Here are the two I'm focused on for Monday
Today at a glance:
Review of the recent Gap Ups list
Two major gaps I’m looking to trade Monday
Answering questions about the HVC
Last week was an impressive one for the market. We went from 0 earnings gap ups to an explosion of momentum setups in only a couple of sessions.
After taking a deep dive into names up 10% or more last week (there were over 450!), this is my wide gappers list:
ACLX AFRM AIZ ALPN AMD ANET ANF APP AROC BHVN BPMC CCJ CELH CRNX CRWD CYBR DASH* DKNG* EDR EVH EXPE* FIGS FLEX FN FNKO FROG FTDR GDDY GIII GRMN* HRB IMVT INFA INSM IT JBL LAMR LDOS LMND* LOGI LULU MLKN OMI PANW PGTI PINS* PK PLTR* PRMW PSN* QLYS QNST ROKU* SBGI SCS SHOP* SLNO TDS TU UDMY* VRT X GPCR
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Two Major Gaps For Monday
Out of the list of names I highlighted above, these are the two I’m focused on come Monday:
DKNG
With new momentum in the market, will be primarily focused on getting positioned in this liquid name on the open. Key characteristics:
Highest Volume In Over A Quarter (HVQ)
88% Daily Closing Range on Friday
16% Price Change on Gap
These are major winning characteristics if you study the Earnings Gap Up strategy.
Here’s my trade plan on Monday:
Set limit or buy stop orders on the HVC: $33.75
Initial wide stops under $32.5 (closing VWAP on Friday, technical area as well)
Initial targets are $35, $40
UDMY
Very familiar with this company, have taken many courses on their site. My eyes lit up when this name came across my screens this weekend for that reason!
Key characteristics:
Highest Volume Since IPO Day (HVIPO)*
84% Daily Closing Range on Friday
38% Price Change on Gap
These are major winning characteristics if you study the Earnings Gap Up strategy.
Here’s my trade plan on Monday:
Set limit or buy stop orders on the HVC: $12.45
Initial wide stops under $11.75 (intraday lows on Friday excluding first 15min candle)
Initial targets are $15, $17.5
*HVIPO is the second strongest visible accumulation signature in the HVC playbook. I am not counting the volume on Friday, June 24th as this is quad-witching/rebalancing volume.
Major Questions About The HVC Setup:
How do you trade a name that gaps and stays above the HVC on Day 2?
Great question. In a perfect world, I don’t trade these names at all. I wait for price to test the HVC level if we gap above, and if we don’t, I don’t execute. Of course, there are exceptions, which I’ll give an example of below:
I traded LMND on Friday and sold for 8%. I went in with a 1/2 position size based on risk, and had stop market orders set on the open. Premarket when I set these orders, price was set to open below the HVC, so I had placed orders at 16.20 or so, slightly above HVC.
I checked back 30min later, and saw that my trade executed and filled at 16.40, and price had never touched the HVC. I immediately set my stop to even and was going to let the market kick me out if we weren’t going to test HVC.
Other names like ROKU & DASH are in the same boat except I had limit orders set on both, of which neither got filled. Just how it goes sometimes.
How do you trade names on Days 2 and beyond after 30-40% moves? Aren’t these ‘extended’?
Great question! If something can move that aggressively in a single session, and meet the other HVC requirements (Volume, closing range), it’s highly likely that institutions are the ones driving up the price. And, if they’re willing to do this in a single session, it’s even more likely they’ll return to buy more in the following sessions.
So, names like LMND or UDMY are high probability HVC swing trades if the market remains healthy.
What is the HVC setup?
Another great question!
This is the setup I use to capture quick momentum bursts from earnings/news gap ups. I look to execute on Day 2 and beyond after the gap, differing from a Qullamaggie type Day 1 gap trade. I go through key criteria, classification and ranking methods, as well as real world scenarios in my FREE email course here:
Hope you’ve had a refreshing weekend and are ready to kill it this upcoming week.
And, if you’re looking for more frequent emails from me (covering the HVC, other setups, my recent trades & performance, etc), consider becoming a paid Upside Unlimited subscriber!
See you there!
Greg