Strongest stock in the airline sector had strong earnings, gapped up, but reversed and trended down all day. A setup that I didn't recognize, but is definitely a setup that can be prepared in advance.

1. Gap up trend
reversal
Catalyst: Earnings beat
Setup: Gap up trend reversal
Trades: VWAP Pull In
Ticker: UAL
Date: 18-1-23

2. Bigger picture: QQQ/SPY and VIX
US CORE PPI: actual 5.5%,
forecast: 5.6% (last: 6.2%). It
measures the change in
selling prices in goods and
services sold by producers.
It’s thought to be a leading
indicator for consumer
inflation.
SPY: SPY was choppy above
VWAP during the open and
then trended down all day.
VIX level : 20
VIX bounced and closed
above 20. Ideal scenario for
market plays.

3. Gameplan
Checklist
-For the setup, the key level is the potential top
formed around 51,75. It fell below premarket.
-SPY has been strong lately and reclaimed the
50SMA. But overall we’re still in a bear market.
-SPY was extremely weak intraday which helps
the thesis.
-Setup: Gap up reversal:
Extreme strength
i) up 8 green days in a row, constantly higher
highs and lows. All trend days.
ii) Up 37% in 7 days. Most extended of the
airlines.
iii) Almost 10atr’s.
iv) All on elevated volume.
Also:
v) 1 day where potential top is in = CHOCH on
the daily.
-Plenty of room to trend due to extended move.
Potential to go higher/lower UAL
Holding above/below key level? Yes
Strong/weak market (bigger
picture)? Medium
Strong/ weak market intraday? Yes
Strong/weak fundamental
catalyst? No
Strong/weak setup? Yes
Elevated RVOL? Yes
Room to trend on daily? Yes
Room to trend intraday? Yes
Trade2hold/thesis
As the trade pulled into VWAP,
SPY started to become weak.
RVOL is high and the intraday
price action is very weak;
opening drive caused for a -
1.1ATR down move.
This makes it a very strong
setup, and given that the
frontside had a lot of 1.75-
2ATR days, I should go big and
aim for a for such a target as
well.

4. Catalyst &
Fundamentals
Catalyst: Earnings beat
Setup: Gap up reversal
Premarket pre buzz: 8%
Float: 325 million
Institutional Ownership: 60,7%
Short %: 5,49%
ATR: 1,83.
Average Daily volume (50 day): 7,9 million.
Daily volume: 31,6 million.
Gap%/Gap ATR: 3,9% / 1ATR
RVOL: >5

5. VWAP Pull In- Bearish Trade2hold – Trade
Management
Trade2hold - Flat
Significant 5m close above 20 EMA:
1) close on above average buying
volume;
2) a new 5m high that occurs after
close;
Goal: don’t sell more than 50%
when going flat.
Reason2hold
-Shallow volume and making lower
lows. Sometimes the trend is still
intact when there’s a significant
close above the 5m 20EMA.
Trade2hold – Core Exit strategy
Measured move: 2ATR target.
Don’t sell you’re core at this
target if there’s not a
reason2sell.
5-10% partials near the
bottom/LOD’s when price is
stalling out.
VWAP entry.
Try to enter as close as VWAP as possible
once price reclaims the 1m 20EMA.
Reasons2cover
-Significant buying volume on 5m.
-Unable to make a new low on low volume.
Double top.
-Time. It’s almost closing time (15:45) and
we are near LOD . Good to take some
profit.

6. Technical Analysis: Daily and Hourly
Extreme strength
i) up 8 green days in
a row, constantly
higher highs and
lows. All trend days.
ii) Up 37% in 7 days.
Most extended of
the airlines.
iii) Almost 10atr’s.
iv) All on elevated
volume.
Also:
v) 1 day where
potential top is in =
CHOCH on the daily.

7. Key levels: Potential top on Daily

8. Trade management
This chart is a prime
example of extreme
weakness. There is
absolutely no reason2sell
until price hit the LOD,
when there’s increased
buying volume.

9. Technical
Analysis:
VWAP Pull In
False breakout candles.
Shallow volume during
consolidation.
Increased selling volume when
price breaks down VWAP.

10. What could I have done
better?
• I have improved my pre-market routine by adding another
checklist. This gives me a better idea of all the potential stocks in
play. But I still need to go more in depth using my old checklist.
This will get me better prepared. I was a bit clueless about the
potential setup that were available. I should do at least two stocks
in depth, preferably D1 setups with a fresh catalyst. Had I used my
second checklists properly, I would have perhaps identified the
potential for a reversal based of scanning for similar setups on the
daily chart.
• I have added this new gap up reversal setup to my playbook. It’s
the opposite setup of the gap up/down bounce day on TSLA. I
want to see extreme strength first and look for a
reversal/capitulation play. Next time I see a daily chart like this I
should be prepared for a potential reversal!