A Relentless Runner Stock and There Is Always a Bounce

When the stock market itself is rallying, and in some kind of a strong uptrend, there are going to be runner stocks. The powerful stock market rallies will breed numerous runners. But the number of runner stocks showing up also coincides with a more concentrated, and weaker, stock market rally. That has been the case recently, as has been the situation where many stocks break out from questionable reaccum areas (the handle). I discussed that a few days ago. We need to let the stock market get on stronger footing. How does it to that? In an overall uptrend it does that via selling off. Last week I discussed why I was beginning to lighten up my long positions. A bit early, but it works. Buy weakness, sell strength. Plain and simple.

On March 1, there were only a couple of runner stocks. MNGA was discussed in premarket. That thing had a beautiful rally off the initial gap selloff.

When stocks have huge up gaps, I do NOTHING until they prove themselves and become “strong stocks” at least for a few hours. I will never even look to buy the big gap up stocks until they get the first selloff out of the way, and then start the rally back into the original range, then try to buy into a reacum area, or off the #1 EA top selloff (or the #2, occasionally the #3). I tried to catch MNGA where those 2 arrows are drawn in. Missed them both, they were both specific technical setups, and at the third arrow, I decided it needs a much deeper trade setup. So I let it be.

And again, only for those truly studying this stuff – there is ALWAYS a bounce off the #1 EA.

 

TENX showed up early in the morning on the rally. I had also been watching this one after I recognized the situation. And this thing was amazing. So many opportunities. I am only looking to take out a chunk out of a runner stock, 10% plus is fine with me when I can.

The setup is discussed, I ALWAYS set my parameters and my stop BEFORE even entering an order. It all must be worked out in my head FIRST, then I try to catch it. MNGA missed it twice, this one I caught, even tho my attention was on several markets at the time.

And again, only for those truly studying this stuff – there is ALWAYS a bounce off the #1 EA.

The discussion is on the chart:

 

My parameter to sell, 10.05, was worked out beforehand, TENX pushed higher, of course I sold way too early, but 8.62-10.05 (on its way to 12), and I’ll take it. And still more opportunities later. To me they were less probability structures, yet certainly tradeable, but so many markets moving yesterday.

 

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About traderscott 1047 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

6 Comments

  1. Hi scott I understand the price action in TENX ( #1 EA in form of 123 bottom) but regarding MNGA could you pls shed some light why they are EA in those arrows ? Thank you

    • Visao, I will do a subscriber post and get very specific as to the details of all of this. Those 2 first arrows were where I was trying to buy. The first one was still a reaccum zone, the second was the first selling “wave” off the #1 EA top. So that second one was a pure bounce trade, while the first one was still the trend trade (reaccum). The third one is where I questioned the structure still being intact.

  2. THe folks who are really studying this stuff – the runners, I love to see it, and applaud you. For the others who “fluff off” this stuff, because “it’s too risky or it’s just crappy stocks”, what is this then. NKTR is a $100 stock, is that too risky and crappy also? I do not understand the lack of effort which surrounds this business.

    Also IMLFF and INNT runners today.

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