The open today was quiet with only a few names standing out. After the moves in the market late last week i am fully expecting a boring flat day today. As you can see we are literally flat on the day as of 1:35. The market needs time to digest, i still think we move lower over time. Notice how down candles are quicker and more violent then the steady slow up candles.
One in name in particular which IS active HAS (Hasbro) she was up about 9% premarket. Of course this told me she was going to gap up, only a matter of if she would hold the gap and continue higher or collapse. I waited for the trade to play out before i did anything, she opened traded higher initially but came back putting in a base at 34, a nice round number. From that point i put in an alert which would trigger if HAS traded below 34, the alert did not go off. HAS traded up 80 cents, came back down and caught a bid at 34.20, which was higher than its previous support. This point combined with the opening prices created 3 points for an uptrend line. This is where to buy, because the price action has confirmed this is indeed one of those trades which is a slow burner but will eventually break higher later in the day, patience is the key.
My previous post on AUXL a similar chart for comparison:
Scenario recognition or (Edge as i like to say) makes this trade work, if you have not seen this type of chart prior to today you would have overlooked it and moved on. To me this is a very low risk high reward trade because of the clear support (buyer) and positive news. The buyer is just a slow patient turtle looking to gobble up shares at a steady pace. If there was not a clear buyer the PPS would have collapsed given the market weakness.
Those of you who would like more information about last Thursdays price action, here is a great Barron’s article highlighting the day.