Tom C. asked me to comment on PCU, a trade he made today and discussed in "Comments". I always say I am not as concerned about the size of the gap as I am the range of the first bar. Often times if it is really wide-range, it could indicate that the stock made the bulk of the day's move already in that first bar. Many times price will simply go sideways for the remainder of the day.
A good rule is to look at the price action to the left (at the previous week, for example) to see if the stock often prints wide-range bars. In the case of PCU, a quick study indicates that it does. So what is usually a "red flag" for me is less so in this case. I did not trade PCU, but apart from the concern over the first bar's range, it was textbook - a break of the second bar high, with the second bar being a narrow-range, inside bar that forms a nice hammer.
I discussed my "quick hit" in MT earlier. Here is the 15-minute chart:
And, we discussed BSX earlier today in comments. Here is the 30-minute chart:
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Tags:
Trader-X, Stocks, Fibonacci, Trading, PCU, MT, BSX
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