Thursday, June 25, 2009

Patterns and set ups

   As intra day traders it is important for us to do our preparation so that when our set ups come we can quickly execute on what we are seeing. 
   This morning was a classic example of one of those set ups presenting itself in BBBY and each trader has to ask them self if they were prepared for the scenario.  BBBY reported earnings last night and was gapping up $1.50 as the futures were making lows pre open.  Did you know how BBBY had traded the last time it reported earnings?  What is typical price action for it?  How do we capitalize on this information?  
   During the open, many traders on our trading desk noted that BBBY had traded similarly during its last earnings release (see below on April 7) and that the move came in waves until the stock had finally made a sizable up move. Further, note the extension on high volume for the stock.  If you compare the trade form the last earnings release to today, you will see an eerie similarity.  
   Again, as intra day time frame traders we need to prepare and gather as much information so that we can quickly capitalize on the information the tape is disseminating to us. Next time BBBY releases earnings I will keep today (as well as April 7th) in mind and add it to my database of information. 


See LEN below as well: