Here is a trade review of $LEDS, demonstrating my bottom bounce setup. You will see me play it often. A falling stock will eventually run out of sellers, at which point it will flatten out and the buyers and sellers will reach a state of equilibrium. At this time, the value buyers also start sniffing around, sensing that the selling was overkill. Now that the heavy selling is over, even a hint of buying pressure can reverse the stock, giving it a major pop and even potentially a long term trend reversal.
That’s what we did with $LEDS. This was a stock I had my eye on for sometime; once it had a few days of basing action with its short term moving averages converging on the top of it, that’s when I get the signal that it may squeeze.
- My entry was $2.88
- Out 1/2 at $3.08
- Out last 1/2 at $3.21
I give myself a B on this trade. The entry was timed perfectly to the penny, but I broke a few rules and sold too early. I made an assumption that the stock went up too far to fast, instead of letting it develop. So I ended up leaving a potential 20 cents on the table.
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