Spring Bonus: Join us for a special trading platform setup class + 6 months of Bulls Vision free

You have Successfully Subscribed!

Bulls on Wall Street: Stop Guessing. Start Trading.

We recently showed you how to trade a parabolic short setup. That's a powerful trade that provides nice gains to the experienced. But shorting that initial drop isn't the only way to capitalize on a parabolic stock - you can also watch for a pullback opportunity. Let's dig in!

Just to refresh your memory, a stock is considered "parabolic" when it has made a huge run up in a very short period of time. That's what $SPU did recently, breaking over $4 and running to $18 in a couple short weeks.

spu3

Those kinds of runs aren't sustainable; at some point, it will likely retrace some of that move (setting up the parabolic short trade opportunity). But very rarely do stocks immediately retrace all of that move - they usually bounce several times along the way, providing long opportunities. We usually wait until the third down day. In the case of $SPU, it dropped hard on Tuesday, continued to fall Wednesday, and then on Thursday it gapped up.

spu2

Once we see initial strength, we start looking for a sign that it will be sustained. $SPU started flagging intraday, and also held above its moving averages. The flag broke around $10.2, with large green candles confirming the move. It then ran all the way to $12.7, riding the 9 EMA along the way. For exits, you'd want to sell into the spikes, and keep a partial position with a stop at the buy price. This is not one you usually want to hold overnight, though.

About Maribeth Willoughby

Kunals first student, Maribeth helped build the Bulls educational courses. She now helps new traders determine the best educational track for their trading goals.

Pin It on Pinterest

Share This

Free Trader Handbook

Get our exclusive “Trader Handbook, The Bible for Traders”. With this ebook you will:

       Create your own perfect morning for peak performance

       Learn how to develop your strategy for evaluating a stock

       Learn proper risk management rules when making a trade

       Get access to our daily trading checklist and list of trader jargon

Plus a lot more

trader handbook

Thanks for subscribing!