It didn’t take long Friday morning to realize that the market was having problems staying afloat. CNBC was continuously pumping the bad news out of Europe and the Gulf of Mexico. The vibe was negative and we had just come off a weak day on Thursday. There just wasn’t much hope that the market was going to rally, let alone on a Friday.
Before the market even opened, I was down on an overnight hold, BEE, thanks to a public offering announcement. I sold in pre-market, licked my wounds, and moved on. But, the market wasn’t ready to move on and may not be ready to rebound Monday either (news still to be determined).
So, why did I take a stab at BCRX? I also tried to play GNA, but I didn’t fair well. Looking back on it, it was a horrible play and I shouldn’t have gone there on a down Friday. Oh, well. BCRX was working. As a matter of fact, it was the big bull at a bear party.
The reason I entered was simple – the daily chart told me to. When the market is ugly, I focus my screens on trying to find stocks sitting on proven support (trendlines, simple moving averages, etc.). BCRX stood out like a sore thumb since it was in the green early on. So, time to check out the chart. Well, hello trendline support.
After successfully pushing through SMA100, I took my position with stop just under trendline. The potential loss was minimal, with the chart offering a nice target near SMA200 (8.36). I sold 1/2 as it pushed through SMA50 (second major moving average broken intraday). To my surprise, it continued up from there and finished at the high of the day. Can’t wait to see what it brings Monday.
As a rule, on down days, I’ll always look for stocks with proven support.. usually trendlines or moving averages. If the volume is strong and trendline continues to hold throughout the morning, I like my odds on a long scalp or possible swing back up. Tight stops, as usual.
Have a great weekend and don’t forget to understand why you want to jump into a stock before you do. I forgot that rule in GNA.