D1 earnings gap up - VWAP Pull In - MS - 17-1-23.pptx
1. D1 Earnings gap up
Catalyst: Earnings beat
Setup: D1 earnings gap up
Trades: VWAP Pull In
2. Bigger picture: XLF and VIX
Friday XLF gapped down after
banks predicted mild recession.
The whole sector was done even
though the earnings were positive.
JPM and XLF made a strong
reclaim. XLF made a 2ATR move,
JPM made a 3 ATR move on Friday.
Today XLF traded sideways.
VIX level : 19
VIX bounced and popped up above
the 20 level but closed just below.
Still a trading environment with
Potential to go higher/lower MS
Holding above/below key level? Yes: 95
Strong/weak market (bigger
Strong/ weak market intraday? No
Strong/weak setup? Medium
Elevated RVOL? Yes
Room to trend on daily? Yes
Room to trend intraday? Medium
-The earnings beat wasn’t extremely
strong. But it might have been more
important given that GS reported a big
miss on earnings today. Today’s beat
might have been relative strength.
- It was a large gap up and I think there
were odds that it was too extended for
a strong move/trend. But the amount of
volume and relative strength of catalyst
provided strong intraday price action.
-The first hour MS was up 2ATR which is
a lot. On a technical and market play I
would say this is perhaps too extended.
But again, the volume and catalyst
made sure price pushed higher.
Catalyst and price action were
very strong, that’s what made
this stock a trade2hold. I think it
would have been difficult to call
a new HOD as price pulled into
VWAP. But after such strong,
elevated volume and price
action, this stock isn’t likely to go
consolidate around VWAP.
4. Catalyst &
Catalyst: MS beats profits and revenue marks.
Setup: D1 earnings gap up.
Premarket pre buzz: >3%
Institutional Ownership: 63,8%
Short %: 1,36%
Average Daily volume (50 day): 8,4 million.
Daily volume: 27,9 million.
Gap%/Gap ATR: 4,56% / 2.37ATR
5. VWAP Pull In- Bullish Trade2hold – Trade
Trade2hold - Flat
Significant 5m close below 20 EMA:
1) close on above average selling
2) a new 5m low that occurs after
Goal: don’t sell more than 50%
when going flat.
-Shallow volume and making lower
highs. Sometimes the trend is still
intact when there’s a significant
close above the 5m 20EMA.
Trade2hold – Core Exit strategy
Lack of conviction for new HOD:
-ATR moves: 0,5ATR trend from
Conviction for new HOD once
volume start coming in:
When price hits you’re
measured move target, hold
your core until there is a true
reason2sell. Trail up your stop
along 5m 9EMA.
Try to enter as close as VWAP as possible
once price reclaims the 1m 20EMA.
-Significant selling volume on 5m.
-Unable to make a new high on low
volume. Double top.
-Time. It’s almost closing time (15:45) and
we are near HOD. Good to take some
10. What could I have done
• It’s very important that I set ambitious targets on stocks with a
strong catalyst and strong volume. These are the stocks that make
the biggest moves. The open move of 2ATR seems a lot, perhaps it
looks too large/extended, but this is for a reason. This is a strong
stock, and strong stocks can easily move higher. When I enter this
trade, I need to be ambitious and set a 2.25ATR measured profit
target. There’s absolutely no reason2sell before we have reached
• What I could do to boost my performance is to sell small partials of
5-10% into the new highs/tops. This way I am capitalizing on the
highest exits while keeping my core. This way, I am not selling 25-
33% of my position for a close below the 5m 20EMA. I am doing a
better job selling at higher prices, which I am not doing currently.