Two days ago we had a massive premarket runner — I was screaming at people to buy it in premarket before it shot up 59%.
But when the market opened, the stock fell off a cliff.
Maybe you were one of the dip buyers caught trying to catch a falling knife…
Or maybe you sat on the sidelines but you’re still confused why the stock didn’t fly higher — especially since it had some pretty incredible news…
Well, if you’re one of those confused traders, I’m going to give you some clarity today.
Read on to find out why Recursion Pharmaceuticals, Inc. (NASDAQ: RXRX) wasn’t a buy on Wednesday … But it’s a top watch today.
Why RXRX Wasn’t a Buy On Wednesday
If you trade during regular market hours, RXRX wasn’t a buy on Wednesday.
Yes, I know it had incredible news with NVIDIA Corporation (NASDAQ: NVDA)…
And I was screaming for people to buy it during Pre-Market Prep…
But once the market opened there was no reason for anyone to get in this thing. I mean, look at all those red candles at the open…
If you’re scratching your head and wondering how I can be streaming for people to buy the stock in the premarket but not at the open — let me explain…
As traders, we want to check all the boxes before a trade.
And while RXRX had impressive news that was bullish, we still have to check the other boxes…
- Is it a low float?
- Does it have float rotation of the potential to rotate the float as the day goes on?
- Is there a pattern?
- Is it full of short sellers?
- Does it have a history of running?
Not every trade will check all the boxes — but we want to check as many as we can.
RXRX didn’t check a lot…
- It has a large float.
- It didn’t rotate the float.
- There was no pattern after the open.
It does have a history of multi-day runs, but short sellers were all probably blown out of the water in premarket in that massive move.
After all — RXRX gapped up from $6.78 to open at $14.67!
So during premarket, there was still a good opportunity — if you follow my rules like buy in pre, sell in pre.
The news was hot and fresh and short sellers all had to exit.
But after the open, there was no reason to enter a trade…
The news was priced in and there was no confirmation it could go higher. There was no pattern and the stock could’ve even hold above VWAP.
But still, dip buyers kept trying to guess the bottom. It’s the opposite of short sellers trying to guess tops as the stock climbs…
I don’t like guessing games.
I like to have a plan with key levels for my entries, risk, and goal.
And if my entry price isn’t triggered, I avoid the stock — no matter how ‘good’ the news is.
Now, let me be clear — RXRX is absolutely still a stock to watch. Especially since today is Friday and a prime day for short squeezes…
But you must wait for confirmation and a pattern.
It’s now had two days to lure in short sellers … So when it breaks key levels, it could go…
But remember, this is a large float stock that won’t be as explosive as low floats.
If you want to know which levels are key — join me in StocksToTrade Advisory.
I go over key levels and how to plan trades in my Market Update videos three times per week.
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Have a great day everyone. See you back here tomorrow.
Lead Trainer, StocksToTrade