Did a great job of finding a stock showing relative strenght to the market. The semiconductors were the strongest class yesterday and NVDA was gapping up.

1. Bounce Trend Day -
(Failed)
Continuation
Catalyst: Technical catalyst
Setup: Bounce Trend Day Failed
Trades: Trend PB
Ticker: NVDA
Date: 9-1-23

2. Bigger picture: SMH and VIX
SMH:
Trended down 16% within 3
weeks and bounced. Friday
there was a trend day, and
we broke out of this range
on volume. Today (Monday)
SMH gapped up 2% and
was the strongest sector
premarket.
VIX level : 22
VIX was above 20 and
therefore traders should
lean more towards
market/technical plays. It
was crucial for this play.

3. Gameplan & Catalyst
Catalyst: I noticed that SMH was strong premarket and broke and had broken out
of its bottom range, whereas SPY and QQQ’s lacked behind. SMH was showing
relative strength. The drop with 16% on SMH was greater compared to SPY and
QQQ, 8% and 12% respectively, but this means the bounce could be stronger as
well.
NVDA, one of the largest holdings of the SMH, and a former growth stock that
took a large beating in 2022, sold of +25% within 3 weeks. I noticed that this stock
had a lot of trend days that occurred after a bounce, and even showed some
continuation.
After NVDA almost gapped up 3%, pushed 0.8ATR in the first 30m and quickly
pushed to 1ATR after 45 minutes. It pulled back towards the opening drive high
and consolidated on shallow volume. This is where I wanted to get involved.

4. Market play–
Trade Strategy
Stock selection – Market play
-Market play/technical play when VIX is elevated.
-Strong technical bounce setup on daily.
-Strongest sector premarket AND intraday.
-Strong gap up of 3%.
-Price history shows PLENTY of trend days.
-Strong open of +0,8ATR push.
Setup:
Hypos: Bounce continuation trend day.
Does the setup match the catalyst?
The market is showing strength and I have picked the strongest stock that has shown strong trend
days after bounces before.
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.
Does the trade match the setup?
A trend PB matches this setup very well.

5. Trend PB - Trade2hold – Trade Management
Trade2hold - Flat
Significant 5m close above 20 EMA:
1) close on above average buying
volume;
2) a new 5m high that occurs after
close;
Goal: don’t sell more than 50%
when going flat.
Reason2hold
-Shallow volume and making lower
highs. Sometimes the trend is still
intact when there’s a significant
close above the 5m 20EMA.
Trade2hold – Exit strategy
-ATR moves: 1,25ATR or
1,5ATR.
-Sell into the close near LOD.
Trend PB
Entry: After price pulled in 5m 9 or 20 EMA
and after a top has formed on tape:
-We can’t trade lower.
-Tape starts to get stronger.
-Bids are stepping up.
-Stronger offers get taken out.
Risk: At the bottom of the pullback.

6. Catalyst &
Fundamentals
Catalyst: Technical/market play.
Setup: Bounce Failed continuation
Float: 2,36B
Institutional Ownership: 65,9%
Short %: 1,43%
ATR: 7,02
Average Daily volume (50 day): 46 million
Daily volume: 50,4 million
Gap%/Gap ATR: 3,08% / 0,65ATR
RVOL: 1,37

7. Technical Analysis

8. Key levels
Support:
150 is the top of the range and
psychological level. 8,5/10
significance. This is also the
inflection area for the setup; it if
trades and holds below, the
setup bounce setup isn’t valid
anymore.
Resistance:
153 was the premarket high and
a former intraday level.
7,5/10.
160 is a former intraday level
where the stock bounced after
selling off five days in a row.
7/10 level.

9. Technical Analysis : Strong open
Buyers are very
dominant. Price forms
an opening range and
breaks through it
quickly. We pull back on
light volume and make a
push towards 1 ATR
move.

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 OD high: 157,50
Elevated volume when PB
starts to work.

11. Reading the tape
Looking for potential bottom and entry.
157,50 is a level of interest. (Start tape:
-The bids are holding ,50 well. When we break down big bids show
up at ,40. Those get pulled for 0,5 seconds and then reclaim.
-Within 1 second the bids reclaim .50 again. Now I want to look for
green prints coming in, significant offers getting lifted and/or offers
getting skipped.
-We are trading in the ,46 – ,64 range for a moment. Then very
quickly, green prints come in and the tapes starts to speed up. And
from ,54 offers we trade to ,72 immediately. This would have been
a strong cue to get in for a potential bottom. (45:21)

12. Trade management
Entries:
1) I entered earlier after some increasing selling volume. The
first entry I got in at 158.06, when we held above for a
moment. I should have prepared potential bounce/support
levels in advance and look at the open price action. This way
I would have seen that .50 is a level of interest. Then I should
have put more focus on the tape. It was clear that .50 and
.40 where strong at the bids.
2) Second entry I chased with an entry at 158.39. The low
was 157.33 and the high of the range is 158.95. This is an
awful entry. I want to get in as close to the low as possible.
The range is 1.62 and I got in at 1.06. At 65% of the range.
After I got stopped out, the best re-entry was when we
immediately reclaimed .50, held and then skipped some
prices at the offer towards .70. Here we are just within 25%
of the range. This is what I should focus on next time.
3) third entry was at .92. This was the best entry so far. But
still there is a lot of room for improvement.
Exits:
1) Missed my first target by 20 cents because I was not at the
desk.
2) I sold when SMH started to break down and NVDA also
was breaking down on increased volume below the 5m
20EMA. Also, we made a new low. This was the clear end of
the trend.

13. What was the optimal trade management strategy, in order to minimize risk when
wrong or maximize gain when right?
If I was holding more size, I should have considered taking off more at 1,25ATR here. I
perhaps had a bit of recency bias in terms of price targets and analyzing the prior
trend days.
-Big prior trend days of >1,5ATR where in an uptrend. They weren’t bounce days.
- NVDA has seen some strong bounce days. But not very often was the next day also a
big trend day. The two most similar ideal setups that I could find, highlighted on the
daily chart, did not make a 1.25ATR move intraday.
D1 ATR Downtrend Gap ATR ATR move C - H in ATR
0,99 -33,0% 0,202 0,92 -0,01
1,24 -23,0% 0,391 1,04 -0,07

14. What could I have done
better?
• I should understand better that this was a continuation play and
that the real Bounce trend day was last Friday, where we already
made a 1.4ATR move which was a solid move. TSLA made 1,25 for
example. This makes the odds of a strong trend day today less
likely. When I trade bigger, I must take this information and sell my
core into 1,25ATR move.
• My entries are my focus for the next trade. Once I have decided I
will trade this setup, I will pick some levels of interest and focus
completely on the tape. My goal is to get an entry within 25-33%
from the range. The range is the low of the retracement and the
high of the PB(HOD). This will be my 1% improvement, I will update
my checklist accordingly.