Hello everyone. @szaman here. We had a nice trade on YELP in the chat room today. Here’s the setup explained.
In his book “Hit and Run Trading 2”, Jeff Cooper talks about a trading technique called , “Hot IPO Pullback”setup”. The rule basically is , Hot IPO debuted and traded at least 15% higher than its offering price.We wait for 2 to 4 days of pullback.After the second , third or fourth day, we will buy the stock right above previous day’s high with stop below previous day’s low.
YELP was offered at 15 per share on 03/01.12 and day high was $26. For next 5 days stock kept on pulling back. Today YELP held yesterday’s low . I had an alert setup above whole number $20 with a secondary alert at yesterday’s high 20.40.
The stock moved over $20 really quick to secondary alert20.40. No entry here because it was way too far from morning low 19.52.So I waited, stock bases nicely below 20.40 as 9 EMA/5 min catches up. Entry was 20.38 with stop below 20.20. We took some of at 21.70’s for almost 7% gain with tiny .18c risk.
Second entry was around the end of the day for a scalp when it took out intraday high 21.83 for a quick .70c gain. Hope this helps and adds another ammunition in your trading arsenal.
