Black Diamond Therapeutics, Inc. (NASDAQ: BDTX) was absolutely beautiful on Tuesday…
First, we nailed the play in Pre-Market Prep. (Find out how you can get in Pre-Market Prep here.)
Then it became my number-one watch for a post-9:45 a.m. dip and rip…
And the plan played out perfectly in the afternoon.
But I got a lot of questions about the play yesterday…
Mostly about what I mean when I say a stock is “in play all day…”
How long should you sit around and watch a stock to make a move?
And how do you know when a stock is dead, or when it can come back like BDTX did?
Those are great questions I’m going to answer today.
It comes down to one key component. Plus, another one sprinkled in that made BDTX explode…
When Is A Stock “In Play All Day?”
It was nice to see BDTX bring the post-9:45 a.m. dip and rip back.
So what was the secret sauce behind this stock that was worth watching until it made its move in the afternoon?
When you have a stock with float rotation all day — that stock is in play all day.
Because stocks with float rotation can remain active and offer multiple setups throughout the day.
When a stock experiences float rotation, it means that shares are constantly being bought and sold.
And there is constant demand coming in…
When you combine demand with a low float stock that’s heavily shorted — you get the potential for massive squeezes as we saw in BDTX.
And those can play out as a dip and rip, an afternoon VWAP hold, and high-of-day breaks.
What made BDTX have such an impressive squeeze is that it was also a chat pump in the morning. And chat pump survivors can also create massive short-squeeze moves.
So let’s break down BDTX’s move. To capitalize on stocks with all-day float rotation, it’s crucial to identify key price levels…
I used the $4.32 Oracle level as my ideal entry in BDTX.
And check out how my plan played out…
BDTX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
The dip was longer than we usually see, but when you’ve got multiples of float rotation, the dip and rip idea is in play all day.
If the volume goes away, it’s a different story, but the volume never went away on BDTX. So it remained on watch for a potential move.
BDTX broke the premarket high around noon. It never broke the risk level I handed out in my trade plan, and the stock went well past my goal of $5.
So just because a stock doesn’t make its move right at 9:45 a.m., or even 10:45 a.m. — it doesn’t necessarily mean it’s dead…
If the stock has constant float rotation and forms a base, then you continue to watch and wait for your key levels.
This is why volume is such a critical component of any trade plan. Understand why we focus on high-volume plays and how it relates to float rotation.
When you understand both concepts, you can be well-prepared to seize opportunities throughout the trading day.
Make sure you get in my next Pre-Market Prep webinar and get access to Oracle for key trading levels. Find out how to get both here.
See you there!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade