CMT DAY TRADE SETUP – STOP AND GO FOR 2.19 : 1 MAX REWARD RATIO

Core Molding Technologies, Inc (CMT) announced earnings today. The company had an increase in year over year net income but a decrease in year over year sales. Its stock price saw extreme volatility during the first 30 minutes of trading, rising sharply then dropping sharply. There was a Stop and Go setup during the rise that provided a maximum reward-risk ratio of 2.19 to 1. See my analysis below.

CMT - Winning Day Trade Setup - Stop and Go - 05-11-2020

ACCOUNT OF EVENTS

The markets had a bearish open, with the Dow at -0.87 percent when I checked at 6:30 AM PT.

CNBC’s main headline read “Dow futures drop 200 points, following gains last week, on jitters about reopening the economy.” There was nothing fundamentally alarming about this headline, nor did it give me any clues for a sector play.

The morning’s top gainers were dominated by biotechnology stocks and healthcare related stocks.

APOP held the #1 spot. It was up on news that positive data regarding the use of its ApoGraft technology was published in Bone Marrow Transplantation, a peer reviewed journal.

MYOK was also interesting because it was up on positive news that it had met all endpoints in a Phase 3 study that it was conducting. I’ve traded successfully on positive news regarding Phase 2 studies, so I felt that this was similar enough for a good trade.

AMC was up on news that Amazon was considering buying the company. I decided to skip over this one because although I’ve seen AMC in the top gainers a number of times in recent months, the setups never came together. Plus, trading stocks on acquisition news is a hit or miss for me.

I also liked CYTK because it was up on news that one of its products had been given a Fast Track designation by the FDA.

I’ve seen AVYA make amazing, albeit slow runs up in the past so that immediately interested me. Unfortunately it had mixed news on it, with an earnings miss and a sales beat. Nevertheless, I put it on the back burner to trade if only if a really good setup developed.

I like to trade biotechnology stocks because of the strong price movements they tend to make. The problem this morning was there were so many interesting ones to choose from, that it was hard to narrow down my selection. When this happens I just go with the first one that caught my attention.

So I decided to focus on APOP.

CMT - Winning Day Trade Setup - Finviz 6:30 AM PT - 05-11-2020

Unfortunately it fell sharply below the VWAP right at the open. CYTK fell below the VWAP soon after. MYOK was already trading below the VWAP during pre-market and remained there. I missed a high of day breakout on AVYA.

At 6:39 AM PT I refreshed my view on Finviz as I normally do and I saw that CMT had risen to #3 from #9, up over 39 percent and with over 40,000 shares traded.

Since the news was mixed, I knew the trade would be riskier than usual. But I didn’t see any mention of exceeding or failing analyst expectations so that gave me a bit more confidence.

6:39 AM PT

CMT - Winning Day Trade Setup - Finviz 6:39 AM PT - 05-11-2020

6:35 AM PT

CMT - Winning Day Trade Setup - Finviz 6:35 AM PT - 05-11-2020

It made a strong run up and closed above $4.00, at $4.16.

I anticipated a Stop and Go or Bull Flag setup to form. I normally like to see the price push right below the whole dollar level, then place a buy stop market order at 1 cent above the whole dollar. Since the price was a little bit above that level, I needed to watch the next minute candle closely.

At 6:40 AM PT CMT opened higher at $4.24 but started pulling back. I reasoned that if it could close near $4.00, then $3.99 would be a good stop loss price. Had the price closed at a lower price, then I would have needed to re-evaluate the setup or move on to a different stock.

As the minute started coming to a close, I saw the price had touched down to $3.76, but was back up and about to close near $4.00. So I placed my buy stop market order. The newly established high was $4.24, so my entry price would be 1 cent above the nearest 5 cent interval, at $4.26 ($4.25 + $.01).

I was going for a reward-risk ratio of 2 to 1, so my target limit price was $4.80 [ (($4.26 – $3.99) x 2) + $4.26 ].

By the close of the minute CMT was at $4.05.

At 6:41 AM PT, CMT made a strong break upward, filling my buy order. I quickly went over to my open position and added my stop loss and limit orders with an OCO (Order Cancels Order) condition.

The price had blew past the 1 to 1 reward-risk ratio price of $4.53 [ (($4.26 – $3.99) x 1) + $4.26 ]. Normally, I would move my stop loss to break even at this point, but I saw the price swing so rapidly that I decided to wait for the next minute or two before doing so. I didn’t want to get whipsawed if the trade would turn out successful. I guess that could be a good reason why a 2 to 1 reward-risk ratio is widely recommended.

At 6:43 AM PT CMT made a strong push up, hitting a high at $4.77. Near the close of the minute I moved my stop loss to break even.

At 6:44 AM PT my limit order was filled, and CMT hit a high at $4.86 before dropping sharply.

NOTABLE DATA POINTS

Date: 05-11-2020

Day of week: Monday

Approximate market performance at open: Dow -0.87%, S&P 500 -0.79%, Nasdaq -0.66%

Company name: Core Molding Technologies, Inc

Symbol: CMT

Industry: Specialty Chemicals

Recent news date: 05-11-2020

Recent news headline: Core Molding Technologies Reports $11.8M Improvement In Net Income On 11.4% Lower Sales For The First Quarter 2020

Approximate performance before buy signal: +39.78%

Approximate volume before buy signal: 40,151

Float: 7.36 million shares

Setup: Stop and Go

Buy signal time: 6:40 AM PT

Entry time: 6:41 AM PT

Maximum exit time: 6:44 AM PT

Entry wait time: 1 minutes

Maximum exit wait time: 3 minutes

Order type: buy stop market

Entry price: $4.26

Stop loss price: $3.99

Maximum exit price: $4.85

Maximum reward-risk ratio: 2.19 to 1

Did I trade this setup? Yes

MRAM DAY TRADE SETUP – STOP AND GO FOR 2.41 : 1 MAX REWARD RATIO

Everspin Technologies, Inc (MRAM) announced earnings yesterday, beating expectations on both EPS (earnings per share) and revenue. Its stock price rose sharply during the first 15 minutes of trading today. The Stop and Go trade setup presented a 2.41 to 1 reward risk ratio. See my analysis below.

MRAM - Winning Day Trade Setup - Stop and Go - 05-08-2020

ACCOUNT OF EVENTS

The markets had a bullish open, with the Dow at +1.36 percent when I checked at 6:30 AM PT.

CNBC’s main headline read “Dow futures up 200 points even after record job losses as investors bet the worst has passed.” Although this did not give me any clues for a sector play, I concluded that perhaps investor and trader confidence was high.

The list of the morning’s top gainers on Finviz showed a bit of interesting choices.

PAR held the #1 spot. I usually skip over the top gainer if it has low volume by market open, but I checked its chart and news this time. It looked too thinly traded and choppy to me. It also failed to close above its VWAP. Yesterday, it had a revenue beat, but it also had an earnings miss, so I moved.

VUZI held the #2 spot. I had considerably more interest in it as it had great volume. I also saw it in the top gainers yesterday. Positive news regarding increasing popularity of its smart glasses in the healthcare industry was a possible catalyst for a good trade.

PVAC held the #3 spot. The good plays I’ve made in oil and gas so far were from the Independent Oil and Gas industry. This, plus the fact that the company announced a revenue miss yesterday caused me to skip it.

MRAM - Winning Day Trade Setup - Finviz 6:30 AM PT - 05-08-2020

Other stocks that interested me included CWH, PSTI and FBIO.

I’ve seen CWH present some good setups that I’ve missed in the past, but it announced an earnings miss yesterday so I skipped it as well. It would, however, end up making a decent move that I’ve logged in my data tracker.

I’ve seen PSTI a number of times in the top gainers. It had positive news regarding the start of phase 2 of a study it was conducting. I have, in fact, traded successfully on this type of news. Unfortunately I did not like how the chart looked at the time so I skipped it. It ended up making a nice move during the last half of the first hour, but by that time I had finished trading.

FBIO had some positive news regarding a license deal, but it was trading well below the VWAP already, so I skipped it.

After seeing a bull flag form on VUZI, I placed a buy stop market order, but when I refreshed my view of Finviz at 6:35 AM PT I saw that MRAM had come out of nowhere and shot up to the #2 spot.

MRAM - Winning Day Trade Setup - Finviz 6:35 AM PT - 05-08-2020

I checked the news and saw the earnings and revenue beats.

By the time I checked its chart (6:38 AM PT) it had already started pulling back after making a strong run up and testing $4.70. It looked like the familiar Stop and Go pattern that is quickly becoming one of my favorites.

I canceled my order on VUZI and put in a buy stop market order on MRAM at $4.71. My intended stop loss was at $4.49. I was going for a 2 to 1 reward-risk ratio so my intended target was $5.15 [ (($4.71 – $4.49) x 2) + $4.71 ].

At 6:40 AM PT MRAM pushed higher and my order was filled. I quickly added my stop loss and limit orders with an OCO (Order Cancels Order) condition.

At 6:41 AM PT MRAM hit a high of $5.06. I moved my stop loss to break even since the stock reached my 1 to 1 reward-risk ratio price of $4.93 [ ($4.71 – $4.49) + $4.71 ].

At 6:42 AM PT MRAM hit a high of exactly $5.15 and my target limit order was filled.

A very quick and successful trade. I wish all of them were like these.

NOTABLE DATA POINTS

Date: 05-08-2020

Day of week: Friday

Approximate market performance at open: Dow +1.36%, S&P 500 +1.13%, Nasdaq 0.00%

Company name: Everspin Technologies, Inc.

Symbol: MRAM

Industry: Semiconductors

Recent news date: 05-07-2020

Recent news headline: Everspin Technologies Q1 Adj. EPS $(0.050) Beats $(0.080) Estimate, Sales $10.100M Beat $9.600M Estimate

Approximate performance before buy signal: +32.81%

Approximate volume before buy signal: 61,338

Float: 17.43 million shares

Setup: Stop and Go

Buy signal time: 6:38 AM PT

Entry time: 6:40 AM PT

Maximum exit time: 6:43 AM PT

Entry wait time: 2 minutes

Maximum exit wait time: 3 minutes

Order type: buy stop market

Entry price: $4.71

Stop loss price: $4.49

Maximum exit price: $5.24

Maximum reward-risk ratio: 1.24 to 1

Did I trade this setup? Yes

AXLA DAY TRADE SETUP – STOP AND GO, VWAP BOUNCE FOR 1.24 : 1 MAX REWARD RATIO

Axcella Health Inc (AXLA) announced positive results from a clinical study of two of its products, AXA1125 and AXA1957, for the treatment non-alcoholic fatty liver disease (NAFLD). Its stock price traded in a channel with high volatility, then made a sharp bounce off the VWAP during the first 45 minutes of trading. The setup provided a maximum reward-risk ratio of 1.24 to 1. See my analysis below.

AXLA - Winning Day Trade Setup - Stop and Go VWAP Bounce - 05-06-2020

ACCOUNT OF EVENTS

The markets opened with an upward bias, with the Dow at +0.64 percent when I checked at 6:30 AM PT.

CNBC’s main headline read “Stock futures rise as investors bet on the economy reopening.” I personally think that even if businesses start to re-open, it will be a while before consumers start to feel that it is safe enough to go out, spend and circulate money. So, I didn’t find anything fundamental about this.

The morning’s top gainers on Finviz was dominated by biotechnology and medical device stocks.

MDGS held the #1 spot. I recorded a winning setup for this stock in the past so I was immediately interested. Volume looked great on it and there was positive news regarding a patent. Unfortunately it was already trading far below the VWAP, so I skipped it.

ISEE held the #2 spot. Volume was could have been better but I’ve seen stocks trade well on lower volume. News was mixed on it. It had an earnings beat, but it also had to pause enrollment for a clinical trial due to the Covid-19 situation. It was also trading far below the VWAP, so I skipped it as well.

AXLA held the #3 spot, up over 31 percent and with over 100,000 shares traded. It had decent volume. I felt the positive news regarding the clinical study was a strong enough catalyst. It had a strong opening. I put this on my mental short list, but was still interested to see if other setups would develop.

In fact, I made a losing trade of SDC. For some reason, I thought I had traded it successfully in the past, but looking at my confirmations, it turned out I had not. I also normally don’t trade the first 5-10 minutes, but I guess impulse got the best of me. At any rate, I’ve logged that trade in my data tracker for future reference.

AXLA - Winning Day Trade Setup - Finviz 6:30 AM PT - 05-06-2020

I did a refresh of Finviz at 6:39 AM PT. Apparently I missed the fact that MGNX jumped to the #2 spot out of nowhere. That ended up making a much better move than AXLA. As you can tell, I’ve had better days.

It had fallen a bit in percent gain but still maintained the #3 spot and it had doubled in volume, so I was still interested.

AXLA - Winning Day Trade Setup - Finviz 6:39 AM PT - 05-06-2020

At 6:42 AM PT, AXLA popped back up above the VWAP after having dipped below it during the few previous minutes. It stopped just short of $6.40, with a high at $6.39 and a close at $6.35.

I anticipated a bounce off the VWAP, so I waited for the next minute candle to develop for confirmation. At 6:43 AM PT, the stock touched $6.40, trading very narrowly and closing at $6.35. I quickly put in a buy stop market order at $6.41. I saw that there was support at $6.00, well below the VWAP, so I had an intended stop loss at $5.99. I was going for a 2 to 1 reward-risk ratio, so I had an intended target limit order at $7.25 [ (($6.41 – $5.99) x 2) + $6.41 ].

My order got filled at 6:45 AM PT when AXLA made a quick pop to $6.62. But it lost momentum and pulled back to the VWAP soon after. It spent the next several minutes there and I thought I would get stopped out.

Fortunately at 7:11 AM PT it made a strong bounce off the VWAP, and at 7:14 AM PT it reached $6.94. Since the price had reached the 1 to 1 reward-risk ratio price of $6.83 [ ($6.41 – $5.99) + $6.41 ] I moved my stop to break even.

Sadly, AXLA made another downturn and hit my break even stop loss at 7:19 AM PT.

It was disappointing to not have reached my target, but I am glad that I determined my stop loss correctly and managed my trailing stop well. Since it could have yielded me a profit if I had went for a 1 to 1 reward-risk ratio, I will log this in my data tracker as a winning setup.

NOTABLE DATA POINTS

Date: 05-06-2020

Day of week: Wednesday

Approximate market performance at open: Dow 0.64%, S&P 500 0.62%, Nasdaq 0.00%

Company name: Axcella Health Inc.

Symbol: AXLA

Industry: Biotechnology

Recent news date: 05-06-2020

Recent news headline: Axcella Announces Positive Top-Line Data from AXA1125-003 Clinical Study Showing Multifactorial Activity in Adult Subjects with NAFLD

Approximate performance before buy signal: +26.34%

Approximate volume before buy signal: 218,601

Float: 16.93 million shares

Setup: Stop and Go, VWAP Bounce

Buy signal time: 6:43 AM PT

Entry time: 6:45 AM PT

Maximum exit time: 7:14 AM PT

Entry wait time: 2 minutes

Max exit wait time: 29 minutes

Order type: buy stop market

Entry price: $6.40

Stop loss price: $5.99

Maximum exit price: $6.93

Maximum reward-risk ratio: 1.24 to 1

Did I trade this setup? Yes

RVP DAY TRADE SETUP – STOP AND GO FOR 1.1 : 1 MAX REWARD RATIO

News came out today that Retractable Technologies, Inc (RVP) was awarded a government contract to procure needles and syringes for a COVID-19 vaccination campaign. Its stock rose sharply during the first 15 minutes of trading. The setup provided a maximum reward-risk ratio of 1.1 to 1. I was going for a 2 to 1 reward-risk ratio and got stopped out at break even. See my analysis below.

RVP - Winning Day Trade Setup - Stop and Go - 05-04-2020

ACCOUNT OF EVENTS

The setup occurred on Monday, May 4 2020.

The markets opened with a downward bias, with the Dow at -1.10% when I checked around 6:30 AM PT.

CNBC’s main headline read “Dow futures fall more than 200 points to start the week, airline stocks drop on Buffett sale.” Unsure of how to play this, I took a mental note of Warren Buffett’s sale nevertheless. At the very least, I prepared myself for another potentially bearish day.

Several stocks in the biotechnology industry were in the morning’s top gainers on Finviz. Given the current Covid-19 situation, I wasn’t surprised. So I set out to sort through the list with that also in mind.

STML held the #1 spot. News came out today that it was being acquired for up to $12.50 per share. Already nearing $12.00, I assumed it would not move much higher, so I passed on it.

APDN held the #2 spot. The company announced positive results from their Covid-19 vaccine tests. It was coming off steeply from its pre-market high, but it was hovering at the VWAP for a potential bounce.

ANIX held the #3 spot. The company announced that it had identified a potential therapeutic candidate to treat Covid-19. But it was already far below the VWAP, so I passed on it.

So I decided to watch APDN out the gates.

RVP - Winning Day Trade Setup - Finviz 6:30 AM - 05-04-2020

APDN fell through support quickly. I didn’t write the stock off completely as it was still too early to tell.

But my refresh of Finviz at 6:35 AM PT revealed that RVP had come out of nowhere and jumped to the #4 spot, up over 16% and with over 500,000 shares traded.

RVP - Winning Day Trade Setup - Finviz 6:35 AM - 05-04-2020

I quickly checked the news section on my Thinkorswim trading app and saw the positive headline, then quickly went over to its chart.

At 6:35 AM PT RVP made a strong move toward $4.00, hitting a high of $3.96 and closing at $3.88.

At 6:36 AM PT it started pulling back. I watched it for about 30 seconds to confirm. I quickly entered a buy stop market order at $4.01, with an intended stop loss at $3.49.

My buy order got filled at 6:37 AM PT as the stock rose sharply again past $4.00. I went to my open position and added my stop loss. I went for a 2 to 1 reward-risk ratio, so I also put it in my target limit order at $5.05 [ (($4.01 – $3.49) x 2) + $4.01 ].

RVP continued its move up during the next few minutes. At 6:45 AM PT, it reached the 1 to 1 reward-risk ratio price of $4.53 [ ($4.01 – $3.49) + $4.01 ] so I moved my stop-loss to break even. Within the same minute, the stock at reached a high of $4.59.

Unfortunately the stock lost steam and hit my break even stop loss at 6:53 AM PT.

I was disappointed to have traded a setup that looked so good but not turn a profit. However, I am glad that I was able to manage the trade well. The setup itself is a winner as I could have made money had I went for a 1 to 1 reward-risk ratio. When another opportunity to trade RVP comes I’ll keep this in mind.

NOTABLE DATA POINTS

Date: 05-04-2020

Day of week: Monday

Approximate market performance at open: Dow -1.10%, S&P 500 -0.81%, Nasdaq -0.63%

Company name: Retractable Technologies, Inc.

Symbol: RVP

Sector: Medical Instruments and Supplies

Recent news date: 05-04-2020

Recent news headline: Retractable Technologies has been Awarded an $84M Government Contract for Procuring Needles and Syringes for a COVID-19 Mass Vaccination Campaign

Approximate performance before buy signal: +16.10%

Approximate volume before buy signal: 505,157

Float: 8.90 million shares

Setup: Stop and Go

Buy signal time: 6:36 AM PT

Entry time: 6:37 AM PT

Maximum exit time: 6:45 AM PT

Entry wait time: 1 minutes

Max exit wait time: 8 minutes

Order type: buy stop market

Entry price: $4.01

Stop loss price: $3.49

Maximum exit price: $4.58

Maximum reward-risk ratio: 1.1 to 1

Did I trade this setup? Yes

SNDX DAY TRADE SETUP – STOP AND GO FOR 3.02 : 1 MAX GAIN RATIO

Syndax Pharmaceuticals, Inc (SNDX) announced yesterday that it saw positive clinical results for SNDX-5613, a drug that it has been developing to treat patients with genetically-defined acute leukemias. Within the first ten minutes of trading today, the company’s stock made a Stop and Go pattern, then a move up that was sustained through the first hour. Using my stop loss rules, the setup provided me with a maximum gain-loss ratio of 3.02 to 1. For traders who use looser stop losses, there was an opportunity for a reward of over 9x the risk. See my analysis below.

SNDX - Winning Day Trade Setup - Stop and Go - 04-28-2020

ACCOUNT OF EVENTS

The setup occurred on Tuesday, April 28, 2020.

I started my day checking the markets at 6:30 AM PT. There was upward bias, as all three major indices were positive, with the Dow Jones at +1.55 percent.

I checked CNBC for any news that could assist me with determining how to trade. There didn’t seem to be anything distinctively fundamental, just a headline that merely stated the obvious – “Stocks are set to add to Monday’s gains with Dow futures up more than 400 points.”

Next, I checked Finviz to try and pick out a stock to trade from the list of top gainers. SNDX was number 4 on the list. It was up 21.81%, but it only traded 69,149 shares, so I quickly skip it and look at other stocks that were trading more heavily. There were a handful of them with positive news to serve as potential catalysts, but they were already trading far below the VWAP.

By 6:35 AM PT I had circled back to SNDX and saw that it traded over 168,000 shares, and it moved up to the number 3 spot. I checked its chart and saw that it kept closing higher with each minute to that point. I checked the news on it and saw a headline that read “The Daily Biotech Pulse: Pfizer Earnings, Roche’s Spinal Muscular Dystrophy Treatment, Moderna COVID-19 Vaccine Update.” Since the headline didn’t mention SNDX specifically, I decided to do a quick read of the article, which indeed mentioned that the company announced positive clinical trial results of its drug, and that the the FDA had granted it the Orphan Drug Designation.

Convinced that this was the stock to go with, I monitored it carefully and waited for my opportunity to enter.

The stock kept closing ever higher and I was afraid that this would be a run away breakout, but at 6:38 AM PT SNDX made a strong run up to $15.99, and closed at $15.78. During the next minute it touched $16.00 and started to pull back slightly. I monitored it for 30-40 seconds and anticipated that it would remain between $16.00 and $16.50, so I quickly put in a buy stop market order at $16.01 with an intended stop at $15.49 once the order got filled. I was shooting for a 2 to 1 gain-loss ratio so my intended target limit order was $17.05 [ (($16.01 – $15.49) x 2) + $16.01 ].

At 6:40 AM PT SNDX made a strong break above $16.00, reaching a high of $16.90 and closing at $16.77. I like to to move my stop loss to breakeven once a stock reaches a 1 to 1 gain-loss level, which in this case was $16.53 [ ($16.01 – $15.49) + $16.01 ], so as soon as I saw the price blowing past this level I put went to my open position and added my breakeven and limit order levels with an OCO (Order Cancels Order) condition. I barely had enough time to do this. In fact, I think I missed the profit taking window at 6:41 AM PT when the price reached $17.35, or maybe it was my broker being slow at processing my order.

At 6:42 AM PT SNDX moved lower, touching $16.23. I was a bit frustrated because my target limit order had not been filled, but relieved that if the stock moved even lower I would at least break even. But thankfully it moved higher and my limit order was filled at 6:43 AM PT.

If I would have held on longer in search of a higher gain, my break even stop loss would have been hit at 6:45 AM. For traders using looser trailing stops, there was an opportunity for a reward of 9x the risk. Since I’m trying my best to adhere to my own rules of day trading, I will log the conservative maximum exit price of $17.58 that occurred at 6:44 AM PT, for a maximum gain-loss ratio of 3.02 to 1.

NOTABLE DATA POINTS

Date: 04-28-2020

Day of week: Tuesday

Approximate market performance at open: Dow +1.55%, S&P 500 +1.42%, Nasdaq +1.10%

Company name: Syndax Pharmaceuticals, Inc.

Symbol: SNDX

Sector: Biotechnology

Recent news date: 04-28-2020

Recent news headline: The Daily Biotech Pulse: Pfizer Earnings, Roche’s Spinal Muscular Dystrophy Treatment, Moderna COVID-19 Vaccine Update

Approximate performance before buy signal: +29.52%

Approximate volume before buy signal: 168,902

Float: 27.35 million shares

Setup: Stop and Go

Buy signal time: 6:39 AM PT

Entry time: 6:40 AM PT

Maximum exit time: 6:44 AM PT

Entry wait time: 1 minutes

Exit wait time: 4 minutes

Order type: stop market buy

Entry price: $16.01

Stop loss price: $15.49

Maximum exit price: $17.58

Maximum gain-loss ratio: 3.02 to 1

Did I trade this setup? Yes

CHK DAY TRADE SETUP – VWAP BOUNCE, STOP AND GO FOR 3.6 : 1 MAX GAIN RATIO

Chesapeake Energy Corporation’s stock (CHK) has been rallying for the past few days, coinciding with the current rebound of oil prices. This morning, it made a strong bounce off the VWAP that provided traders with a maximum gain-loss ratio of 3.6 to 1. See my analysis below.

CHK - Winning Day Trade Setup - VWAP Bounce, Stop and Go - 04-24-2020

ACCOUNT OF EVENTS

The setup occurred on Friday, April 24, 2020.

At 6:30 AM PT I checked overall market performance and saw that there was positive bias, with the Dow Jones Industrial average up around 0.77 percent.

Next I went over to CNBC for any news that could have help me in today’s trading decisions. The headline read “Dow futures jump 150 points as oil continues rebound from historic lows.” With that in mind, I was hoping to see see some oil stocks in the morning’s top gainers.

Sure enough, I see CHK in the top five list on Finviz, up 26 percent with over 300,000 shares traded. I placed particular interest on this stock not only because of the positive news surrounding oil prices, but it was also a top performer yesterday, during which I was able to capitalize on in the late morning. It has been my personal experience that a stock that is on the radar for a second consecutive day usually provides opportunities for additional gains before it fades.

I checked for recent news specific to CHK. A negative sounding headline registered yesterday afternoon. It read “Chesapeake Adopts Poison Pill After Shares Drop on Oil Rout.” Given how the stock had been performing well recently, I open the article to obtain more details and see if I was entering into a bad trade. The article stated that the company took actions to “thwart any takeover attempts.” This can actually be positive news for some shareholders. The ambiguity of the news, lead me to place more weight on the general news regarding the oil price rebound.

The stock did a short bounce off the VWAP during the first few minutes of trading but quickly sold off a bit below it by 6:49 AM PT. but it reversed off this low just as quickly and closed back above the VWAP by 6:54 AM PT. Not completely convinced that the upward movement would continue, I decided to let the setup develop a little more.

I didn’t have to wait long. CHK tested the VWAP for 2 minutes before making a strong push up, touching $37.00 at 6:57 AM PT. It then pulled back during the next minute, testing $36.00. Seeing these resistance and support levels at the whole dollar levels, I quickly put in a buy stop market order at $37.01, with an intended stop loss at $35.99. I went for a 2:1 gain-loss ratio and calculated my target limit at $39.05 [ (($37.01 – $35.99) x 2) + $37.01) ].

At 7:00 AM PT the stock made a strong break above $37.00, filling my order. I quickly went to my open position and added my stop loss and limit levels with an OCO (Order Cancels Order) condition.

CHK continued the upward move with little hindrance, reaching my target at 7:07 AM PT and topping out at $40.69 by 7:09 AM PT.

NOTABLE DATA POINTS

Date: 04-24-2020

Day of week: Friday

Approximate market performance at open: Dow +0.77%, S&P 500 +0.67%, Nasdaq +0.48%

Company name: Chesapeake Energy Corporation

Symbol: CHK

Sector: Independent Oil and Gas

Recent news date: 04-23-2020

Recent news headline: Chesapeake Adopts Poison Pill After Shares Drop on Oil Rout

Approximate performance before buy signal: +27.43%

Approximate volume before buy signal: 1,471,358

Float: 8.86 million shares

Setup: VWAP bounce, stop and go

Buy signal time: 6:58 AM PT

Entry time: 7:00 AM PT

Maximum exit time: 7:09 AM PT

Entry wait time: 2 minutes

Exit wait time: 9 minutes

Order type: stop market buy

Entry price: $37.01

Stop loss price: $35.99

Maximum exit price: $40.68

Maximum gain-loss ratio: 3.6 to 1

Did I trade this setup? Yes