Monday, July 21, 2008

Gapper Dummy Trade - ArthroCare Corporation (Public, NASDAQ:ARTC)

ARTC was a pre-market gapper with momentum after announcing they were restating financial statements. This kind of news is deadly, so you want to get in as soon as reasonably possible. Markets don't like the unknown and restatements inevitably lead to write-offs or write-downs. A great example is NT which restated at least ten times over the past seven years. Still not sure these guys ever got it right.

My second attempt to get in was not in the cards as the stock became unavailable for shorting. No surprise there.


As I mentioned in pre-market, I was expecting some backing and filling after last week's big thrust. LEH played into that scenario perfectly. After taking out resistance in early trade, it couldn't sustain the higher prices. It carved out an IB at support which closed on its lows, setting up an easy short back to the next level of support.

8 comments:

Rick said...

I was considering going long in energy stocks today. Do you think you would have entered VLO at the third try at breaking 35.14 on the 5 minute charts around 12:30? It looks like a good B&B with volume contraction.

Jamie said...

Rick,

3 PP base with higher lows leading into the BO and volume contraction during consolidation is a perfect B&B entry. Good catch!

anarco said...

Welcome back Jamie!
I hope you had a good time.
I saw ARTC this morning but hesitate because of the distance from the 5EMA. I'm sorry I did :-(

bl said...

Jamie,
Right arm on that newsy trade. Agree totally. Ibid with LEH and other financeals. should be some newsy trades at the pre/open.

Anonymous said...

Jamie,
What is meant by "backing and filling"

Jamie said...

Thanks Anarco,

Yeah, it was far away on 15 min. but looked better on 5 min. It is hard to know how much backing and filling will take place before these wide gaps break down.

Jamie said...

BL,

Some of these pre-market gappers start ripping on the scanner and really catch my attention. So far this morning it's MICC.

Jamie said...

Susan,

After a sharp move in a short period of time, stocks back and fill gaps as they build a base before the next leg up/down. Consolidation is another way to describe it.