This is a trade review for $ECYT. Earnings/PR Breakouts are my favorite setup as we are combing a fundamental catalyst to go with a technical move. $ECYT was a chart that we had been watching for months to see if it ever comes out of its big base. Last week, on the 14th, it finally had a PR (press release) that gapped it out of its range. Now that gap was key as it moved into a squeeze zone where anybody who was short had to cover along with the fact that we had a gap fill. When you combine those with momentum buyers who come in and trade off press releases you get a perfect storm of momentum that can take a stock much higher than is technically or fundamentally warranted.
We added this stock about 15 minutes into the open at $4.44 and proceeded to sell off 1/2 at $4.73 to book profits on a quick 6% gain. Then the stock proceeded to base intraday in the afternoon where we added back a full position at $5.30 with a stop at $5.19 on all shares.
This type of pyramiding is very powerful as you’re adding shares only as the stock proves itself and doing it at levels where your risk is minimal. After adding back a full position we essentially have 1.5 position in this stock and so we immediately want to start scaling out as the stock moves in our favor.
1st sell was at $5.65
2nd sell at $5.99
3rd sell $6.01
That’s a 35% gain from our original buy to our last sell! Those are what we call ‘account builders’ and you really need them a couple times a week if you’re going to make some real money.
I give myself an A- on the trade. There were a couple other spots where I could have loaded more shares for the home run but we were so hot this particular day in the room that I just lost track as I was trading 5-6 tickers at once.
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