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Gap down Bounce
Trend day
Catalyst: Extreme weakness, eventually the stock is due for
a bounce.
Setup: Gap down Bounce Trend day
Trades: Trend PB
Ticker: TSLA
Date: 6-1-23
Bigger picture: QQQ and VIX. Trend day!
Macro:
unemployment rate fell from 3.7% to
3.5%. More jobs added than expected.
SPY & QQQ react positively so far.
Also : US average earnings YOY actual:
4.6% (forecast: 5%, previous 5.1%).
Apparently wage growth is one of the
feared datapoints the FED looks at: -
0.5% is a major drop. Together with
important job growth, this could be
important.
VIX open level : 22
Market plays and high beta names
stocks that are more in play when VIX
is elevated (>20).
Gameplan
1) What is the catalyst?
TSLA is gapping down 7% on 10% pre volume buzz, breaking through important lows.
On Tuesday they under delivered and we had a big trend day. Then we had two small days green days.
Today the catalyst is that TSLA cuts the prices in China. This is the second time in 3 months. Sales in China
are slipping, competitors are catching up. This means less margin.
2) What is the setup & intraday fundamentals?
Hypos: Trend Trend day. Or a gap down range day where we could either close green or red.
A day where we trend down and reclaim a part of the move could also be possible.
Morning thoughts
TSLA has been so weak lately. At some point they should bounce seriously. But there’s no reason to be
bullish with a weak catalyst.
The premarket low is going to be very important. If we break this and hold below this could be a trend
day. Doesn’t mean we will close LOD. But I want to look for a trade2hold. Could be morning consolidation,
trend PB, wedge pattern, or a VWAP pull in.
If we reclaim or don’t break the premarket low it will likely be a range day between 101 and 107-108,
perhaps even lower.
Bullish open action: after holding above VWAP during the open and longer I would like to look for
weakness and a VWAP breakdown trade. A fail to hold of 107/108 midday that is significant in volume
and duration, I could try a backside trade.
If we hold above the opening range high, THEN I want to be patient.
I don’t want to be patient here next time. I want to look for signs for a bounce trend day.
If we’re bearish below VWAP but can’t break 101 i might want to look for a bounce of this level for a
reversal move2move trade. I want to see some strength on multiple time frames if it’s after the open.
Catalyst &
Fundamentals
Catalyst and bounce trend day cue’s:
-Extreme weakness (on growth stock).
- Catalyst was price cuts in China. This was received very negative, and we
gapped down. But TSLA has worked hard on production. The fact that they
can cut price and still have solid margins is probably bad news for
competitors. AAPL also for instance cut prices on their iPhone.
-Slow bottoming process started day before. This has been visible more
often on the daily.
- Reclaiming important levels during the first 60-90 minutes
Setup: Gap down Bounce Trend Day
Premarket pre buzz: 10%
Float: 2,64B
Institutional Ownership: 44,8%.
Short %: 2,76%.
ATR: 9,90.
Average Daily volume (50 day): 115 million.
Daily volume: 221 million
Gap%/Gap ATR: -6,68% / -0,75ATR
RVOL: >3
Key levels Support:
101 is a very important support level.
8.5/10 premarket level.
Resistance:
105.50 premarket and last trend day LOD
area. 8/10.
108 is also an intraday area 7/10 level.
108 was also a premarket level. Therefore,
I should have graded it higher than a 7/10.
Recently I made a mistake of putting too
much value on an intraday HTF level. But
this is a more recent level that has showed
significance in the last 3 days. I should rate
it higher.
Bounce Trend
day– Trade
Strategy
Stock selection
-Stock in play with a significant (technical) catalyst, earnings report or strong/weak theme.
-Elevated RVOL above 2-3.
- Elevated VIX! This is a technical trade that works best in a high volatility area.
Bounce Trend Day cue’s/variables
Extreme weakness:
-Large down trend -20 to -30%;
-Plenty of consecutive red days/selling;
-Elevated selling volume on daily.
-Preceding day(s) where a potential bottom/range is in. Massive selling seems over for at least 1 day.
-Reclaim of important key levels.
Trade2hold factors on Bounce Trend day:
- Holding above significant support levels intraday: HTF 8/10 importance levels and later HOD1.
-Strong market, holding the lows in an uptrend OR the market has a Bounce Trend day as well.
-Very weak daily chart.
- Elevated RVOL.
-Strong open through resistance (8/10), or price is holding above opening range
-Strong open in extended (+1 ATR) = Room to trend intraday.
Bounce Trend day - Trade2hold – Trade Management
Trade2hold - Flat
Significant 5m close below 20
EMA:
1) close on above average selling
volume;
2) a new 5m low that occurs after
close;
Goal: don’t sell more than 50%
when going flat.
Trade2hold – Exit strategy
ATR moves: 1ATR & 1,25ATR.
Important S&R levels.
Holding into the close.
Reason2hold
-Shallow volume and making
lower highs. Sometimes the
trend is still intact when
there’s a significant close
above the 5m 20EMA.
Trend PB
Entry: After price pulled in 5m 9
or 20 EMA and after a top has
formed on tape:
-We can’t trade higher.
-Tape starts to get heavier.
-Offers are stepping down.
-Stronger bids get taken out.
Risk: At the top of the pullback.
Technical Analysis: Recent Bounce Trend days.
Gap ATR ATR move C - H in ATR
-0,623 1,19 -0,09
-0,093 1,06 -0,14
-0,371 1,06 -0,04
0,348 0,97 -0,04
All days that followed:
-plenty of consecutive
red days;
-above average selling
volume;
-Large moves of -20% to -
30%.
-All days where trend
days and closed very
close to HOD.
-They don’t have to do
huge volume. VIX needs
to be elevated.
-The gaps are very small,
but the all have one day
where a range/bottom
was formed.
-All made around 1ATR
moves.
More setups!
Downtrend
Gap
ATR
ATR
move C - H in ATR
-34,0% 0,405 1,16 -0,02
-26,0% -1,321 2,13 -0,04
-28,0% -0,154 0,99 -0,06
-34,0% 0,037 1,10 -0,19
Technical
Analysis:
Trend PB
10m holds above 9EMA,
5m holds above 20 EMA.
Shallow volume during PB
Pullback visible on multiple time
frames: 1m, 5m, 10m.
Bounce of key level: 108
Elevated volume when PB
starts to work.
Open price action and confirmation on 10m chart.
During the open price holds above it’s opening range and makes a higher low on low volume.
The trend PB is also clearly visible on the 10m chart. When a pattern is visible on multiple time frames, it leads
to more participants and higher odds of a successful setup.
What could I have done
better?
• I was too bearish, as were a lot of other traders. I didn’t take a
proper bounce trend day into consideration. That’s okay, that’s just
a lack of experience and knowledge. I didn’t have a playbook setup
and didn’t look at the price history of TSLA properly. Next time I
know, after extreme weakness, that a bounce trend day is also an
option I should prepare for.
• And I want to be better prepared for these setups. I must make
scanners that do scan for these extreme weakness. Then I can
make a watchlist, gain some statistical edge, work on a gameplan
and set alerts! These are setups that must be prepared.

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Gap down Bounce trend day - Trend PB - TSLA - 6-1-23.pptx

  • 1. Gap down Bounce Trend day Catalyst: Extreme weakness, eventually the stock is due for a bounce. Setup: Gap down Bounce Trend day Trades: Trend PB Ticker: TSLA Date: 6-1-23
  • 2. Bigger picture: QQQ and VIX. Trend day! Macro: unemployment rate fell from 3.7% to 3.5%. More jobs added than expected. SPY & QQQ react positively so far. Also : US average earnings YOY actual: 4.6% (forecast: 5%, previous 5.1%). Apparently wage growth is one of the feared datapoints the FED looks at: - 0.5% is a major drop. Together with important job growth, this could be important. VIX open level : 22 Market plays and high beta names stocks that are more in play when VIX is elevated (>20).
  • 3. Gameplan 1) What is the catalyst? TSLA is gapping down 7% on 10% pre volume buzz, breaking through important lows. On Tuesday they under delivered and we had a big trend day. Then we had two small days green days. Today the catalyst is that TSLA cuts the prices in China. This is the second time in 3 months. Sales in China are slipping, competitors are catching up. This means less margin. 2) What is the setup & intraday fundamentals? Hypos: Trend Trend day. Or a gap down range day where we could either close green or red. A day where we trend down and reclaim a part of the move could also be possible. Morning thoughts TSLA has been so weak lately. At some point they should bounce seriously. But there’s no reason to be bullish with a weak catalyst. The premarket low is going to be very important. If we break this and hold below this could be a trend day. Doesn’t mean we will close LOD. But I want to look for a trade2hold. Could be morning consolidation, trend PB, wedge pattern, or a VWAP pull in. If we reclaim or don’t break the premarket low it will likely be a range day between 101 and 107-108, perhaps even lower. Bullish open action: after holding above VWAP during the open and longer I would like to look for weakness and a VWAP breakdown trade. A fail to hold of 107/108 midday that is significant in volume and duration, I could try a backside trade. If we hold above the opening range high, THEN I want to be patient. I don’t want to be patient here next time. I want to look for signs for a bounce trend day. If we’re bearish below VWAP but can’t break 101 i might want to look for a bounce of this level for a reversal move2move trade. I want to see some strength on multiple time frames if it’s after the open.
  • 4. Catalyst & Fundamentals Catalyst and bounce trend day cue’s: -Extreme weakness (on growth stock). - Catalyst was price cuts in China. This was received very negative, and we gapped down. But TSLA has worked hard on production. The fact that they can cut price and still have solid margins is probably bad news for competitors. AAPL also for instance cut prices on their iPhone. -Slow bottoming process started day before. This has been visible more often on the daily. - Reclaiming important levels during the first 60-90 minutes Setup: Gap down Bounce Trend Day Premarket pre buzz: 10% Float: 2,64B Institutional Ownership: 44,8%. Short %: 2,76%. ATR: 9,90. Average Daily volume (50 day): 115 million. Daily volume: 221 million Gap%/Gap ATR: -6,68% / -0,75ATR RVOL: >3
  • 5. Key levels Support: 101 is a very important support level. 8.5/10 premarket level. Resistance: 105.50 premarket and last trend day LOD area. 8/10. 108 is also an intraday area 7/10 level. 108 was also a premarket level. Therefore, I should have graded it higher than a 7/10. Recently I made a mistake of putting too much value on an intraday HTF level. But this is a more recent level that has showed significance in the last 3 days. I should rate it higher.
  • 6. Bounce Trend day– Trade Strategy Stock selection -Stock in play with a significant (technical) catalyst, earnings report or strong/weak theme. -Elevated RVOL above 2-3. - Elevated VIX! This is a technical trade that works best in a high volatility area. Bounce Trend Day cue’s/variables Extreme weakness: -Large down trend -20 to -30%; -Plenty of consecutive red days/selling; -Elevated selling volume on daily. -Preceding day(s) where a potential bottom/range is in. Massive selling seems over for at least 1 day. -Reclaim of important key levels. Trade2hold factors on Bounce Trend day: - Holding above significant support levels intraday: HTF 8/10 importance levels and later HOD1. -Strong market, holding the lows in an uptrend OR the market has a Bounce Trend day as well. -Very weak daily chart. - Elevated RVOL. -Strong open through resistance (8/10), or price is holding above opening range -Strong open in extended (+1 ATR) = Room to trend intraday.
  • 7. Bounce Trend day - Trade2hold – Trade Management Trade2hold - Flat Significant 5m close below 20 EMA: 1) close on above average selling volume; 2) a new 5m low that occurs after close; Goal: don’t sell more than 50% when going flat. Trade2hold – Exit strategy ATR moves: 1ATR & 1,25ATR. Important S&R levels. Holding into the close. Reason2hold -Shallow volume and making lower highs. Sometimes the trend is still intact when there’s a significant close above the 5m 20EMA. Trend PB Entry: After price pulled in 5m 9 or 20 EMA and after a top has formed on tape: -We can’t trade higher. -Tape starts to get heavier. -Offers are stepping down. -Stronger bids get taken out. Risk: At the top of the pullback.
  • 8. Technical Analysis: Recent Bounce Trend days. Gap ATR ATR move C - H in ATR -0,623 1,19 -0,09 -0,093 1,06 -0,14 -0,371 1,06 -0,04 0,348 0,97 -0,04 All days that followed: -plenty of consecutive red days; -above average selling volume; -Large moves of -20% to - 30%. -All days where trend days and closed very close to HOD. -They don’t have to do huge volume. VIX needs to be elevated. -The gaps are very small, but the all have one day where a range/bottom was formed. -All made around 1ATR moves.
  • 9. More setups! Downtrend Gap ATR ATR move C - H in ATR -34,0% 0,405 1,16 -0,02 -26,0% -1,321 2,13 -0,04 -28,0% -0,154 0,99 -0,06 -34,0% 0,037 1,10 -0,19
  • 10. Technical Analysis: Trend PB 10m holds above 9EMA, 5m holds above 20 EMA. Shallow volume during PB Pullback visible on multiple time frames: 1m, 5m, 10m. Bounce of key level: 108 Elevated volume when PB starts to work.
  • 11. Open price action and confirmation on 10m chart. During the open price holds above it’s opening range and makes a higher low on low volume. The trend PB is also clearly visible on the 10m chart. When a pattern is visible on multiple time frames, it leads to more participants and higher odds of a successful setup.
  • 12. What could I have done better? • I was too bearish, as were a lot of other traders. I didn’t take a proper bounce trend day into consideration. That’s okay, that’s just a lack of experience and knowledge. I didn’t have a playbook setup and didn’t look at the price history of TSLA properly. Next time I know, after extreme weakness, that a bounce trend day is also an option I should prepare for. • And I want to be better prepared for these setups. I must make scanners that do scan for these extreme weakness. Then I can make a watchlist, gain some statistical edge, work on a gameplan and set alerts! These are setups that must be prepared.