Strong bounce play on ILMN. The best opportunities were in the morning. I was watching it for a pullback but gave up on it too early. The PB that followed wasn't an A+ setup but still had some edge.

1. Gap down Bounce
day
Catalyst:
Setup:
Trades: HTF Trend PB & First Consolidation
Ticker: ILMN
Date: 10-1-23

2. SPY and VIX
SPY reclaimed yesterdays
close and started to
trend slowly. It made a
higher low on the daily
chart that was above the
consolidation range of
the past two weeks.
VIX > 20 = high volatility.

3. Gameplan
1) What is the catalyst?
Weaker than expected 2023 profit outlook.
Gap down of >2.5ATR, 9% down.
1.43ATR bullish opening range.
755% volume buzz at 9:45
6 RVOL
2) What is the setup & intraday fundamentals?
Potential gap down reversal, bounce trend day.
3) What does the daily look like? Any recent/prior gap ups/downs. Has it a lot of big
trend days? ATR move’s? Look for repetitive price action and similar setups!
Last few months sideways action. Some big gap downs, most of them closed red.
In 2020 price gapped down 10%, price made a red to green, 1.4ATR push and then
closed weak, but green.
4) Identify areas of interest. These are prices a stock will tend to trade to, after they
had a catalyst. If a stock can move through these levels, they may have an explosive
move.
Is there an inflection level?
It's already up a lot, but it has also gapped down a lot on negative news. Really need it
to hold above the opening range high for a possible trend setup.

4. Catalyst &
Fundamentals
Catalyst: Weaker than expected 2023 profit outlook.
Setup: Gap down bounce day, Gap down reversal.
Float: 156 million
Institutional Ownership: 91,1%
Short %: 2,56%
ATR: 7,77
Average Daily volume (50 day):
Daily volume:
Gap%/Gap ATR: -9% / >2.5ATR
RVOL: >6

5. Key levels Support:
180: HTF level and psychological level 8-10
Resistance:
188: Prior intraday low. 7/10
190-192: Bottom area of range put in 3
weeks ago. 8/10.
198-200: bottom or range that followed.
Also psychological area 8/10.

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:
-10% Gap down, down over 2.5 ATR.
Strong open:
-During the open price quickly breaks the resistance levels and holds above.
-Elevated volume.
Trade2hold factors
- Holding above significant support level: HOD1 8/10 importance level.
-Strong market, holding the lows in an uptrend.
-Market starts to trend intraday.
-Strong catalyst: Bounce day on D1 after large down move. Strong intraday price action.
- Elevated RVOL:
- Solid trade pattern: First consolidation & HTF Trend PB
- Room to trend on the daily: For first trade: Yes. HTF Trend PB: No.
- Strong open, but extended: 1,75ATR. Immediately trends higher to 2ATR :
-Room to trend intraday.
.

7. First consolidation - Bullish M2M – Trade
Management
Move2move - Flat
Significant 1m close below 20 EMA:
1) close on above average selling
volume;
2) a new 5m low that occurs after
close;
No volume or move is topping out:
Significant close below 9 EMA.
Move2move
-Profit taking into
psychological numbers and
overextensions.
-Comes into price
target/indicator and begins to
reject this price.
-Heavy sellers on the tape into
key level.
-Consolidation break to the
upside.
-Fails to hold above key level.
-Sharp unstainable moves
higher.
First consolidation entry.
Trigger: usually a false breakout candle.
Entry: As close to false breakout candle as
possible.
Risk: Low consolidation
Trend PB
Entry: After price pulled into 5m 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.

8. Technical Analysis:
First consolidation
– Morning
continuation
Strong opening drive:
stock is trending
Usually, a consolidation that
lasts more than 10m
False break down candle.
Elevated volume when price
breaks HOD
Shallow selling volume in
consolidation
Visible on multiple (1m & 3m)
time frames

9. Technical Analysis:
“Extended” Trend
PB
Extreme >2ATR move during
morning
Shallow volume during PB
Pullback visible on multiple time
HTF frames: 5m, and 15m.
Bounce of key level: 192,50 first
consolidation low
Elevated volume when PB
starts to work.

10. Ideal trade management
Entry cue:
Failed break below 192,50 after low
volume. Since this is an extended
setup and I don’t think it’s likely that
we have strong move towards HOD,
a 25% range target makes sense.
Reason2sell:
We don’t have any volume coming
in, but price start trending along the
9EMA.
-Overextension: at 198 price is
extended from the 9EMA and is
putting in a top. No volume done
here.
-Break down 9EMA = a CHOCH here.
If there was volume, I would give it
more room.

11. What could I have done
better?
• Just because a stock has the potential to go higher that doesn’t
mean this is a trade2hold. I should go through my trade2hold
checklist and rate the potential to go higher or trend.
Then I need to decided whether this is a move2move or a
trade2hold. Both could have the same measured profit targets, but
how likely is it that price goes higher after a pull back? How high
are the odds of reaching this PT?
• I was watching this trade and was looking for a pullback of the
consolidation high. This would have been the strongest scenario.
But price did some elevated volume and broke the 5m 9EMA. But I
should realize that the bounce doesn’t always occur from the best
levels. It bounced of the low of the first consolidation instead. I
should be better aware next time.