We traded pcrx for a nice quick profit on wednesday and I was going to go over the mechanics of the trade. Parabolic shorts have always been one of my “go to” setups. Here is another blog from the past explaining the setup as well.. check it out if you haven’t already. If you are new to trading, it is great to find one or two setups that you love and play them over and over again until you have it mastered. I started trading a few years ago and for me the parabolic short was always one of my top money making plays.
When you see a stock that has run up multiple days in a row you automatically start thinking about the parabolic short play. So logically, the stock can’t go straight up forever right? Eventually it is going to need to rest or fall back. What I am looking for on parabolic short plays.. is a gap up and overbought conditions.. when you see weakness in the stock that is your cue to short it.
We shorted $pcrx at 13.85 as it was turning red, almost immediately, the stock dropped .40 cents and we covered some of our shares. When a parabolic stock goes red.. you are expecting a panic drop and that is exactly what we got. Never get greedy always cover into panic and take your profits.