Knowing how to spot bad setups is as important as knowing how to spot good setups.
It can help you avoid unnecessary trades and losses.
When I see trash setups with no volume — I have zero FOMO.
And yesterday I wasn’t too excited to jump into any of the morning gappers…
It just didn’t ‘feel’ like a frothy day.
And the big morning gappers were missing something I was looking for…
These three examples are bad setups, so avoid them at all costs!
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Three Tickers I Didn’t Love And Why
Terran Orbital Corporation (NYSE: LLAP) was gapping up and had space news. Which on a frothy day would probably get me excited. But I’ve been excited about space stocks in the past and they’ve let me down.
The stock has a news catalyst but also a higher float of over 30 million shares. And as we got closer to the open there was another thing I didn’t love…
The stock did nothing but go down…
LLAP chart: 1-day, 2-minute candle — courtesy of StocksToTrade.com
Jeffs’ Brands Ltd (NASDAQ: JFBR) spiked early in premarket as well. But as we headed toward the open, all the stock gave back half its move.
It has a low float but it also had a weak ChatGPT headline and little volume.
JFBR chart: 1-day, 2-minute candle — courtesy of StocksToTrade.com
AMTD Digital Inc. (NYSE: HKD) was a chat pump and a big former runner. But I wasn’t feeling it…
The float is huge now since the last time it made a big move. So I didn’t think it could really get going. The post-9:45 a.m. rule kept SteadyTrade Team members safe…
HKD chart: 1-day, 2-minute candle — courtesy of StocksToTrade.com
So what do all these stocks have in common?
They all gave back almost all their premarket gain before the open.
And they didn’t check all the boxes for a good trade opportunity…
- LLAP has a higher float and it’s not in a hot sector.
- JFBR had a weak catalyst and no volume.
- HKD has a float of almost 200 million, had no news, and was a chat pump.
These are the reasons why I wasn’t excited about any of them.
And as you can see by the charts, they weren’t good setups. None of them were in an uptrend or played out any of my setups.
So I was right to have zero FOMO.
On days like yesterday, I like to wait for the afternoon to see if there are any morning gappers that survived. In the case of these three — there were none.
It pays off to be in tune with the market and to be able to recognize slower days. I can help you do that with my Market Update videos I send out three times a week. Sign up here for access.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade