T3 Live

T3’s Take 3: The Sideways Shuffle


By T3 Live Staff

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1) The Sideways Shuffle

Today we saw what many traders have been looking for; an up day in Oil. This is the first time in the last 7 sessions that Oil was able to close bullish.

The S&P 500 was sideways, once again, but able to close near the top of the range, up 0.18%.

It is closing in on a month since the last time the S&P has produced a 1% move or better.

The Nasdaq outperformed, again, on heels of strong earnings from GOOGL and AMZN.

Gold found its way to the top of the advancers’ column today, with GLD rising 1.05%.

2) Range Precedes Price

Today, Jeff Cooper provided some insight into the action on DexCom (DXCM):

Our old friend DXCM continues its runaway move.

Note the Spike Volume Bottom in Feb that defined the washout when everyone who wanted out got out.

The large range breakout on 7/19 on increasing volume saw DXCM reclaim 50 % of this years range.

From that point, DXCM has been in runaway mode.

Typically runaway moves don’t offer much in the way of daily pullbacks so using an Opening Range Breakout is a good strategy. Also buying on the first intraday pullback offers defined risk entry.

Today for example DXCM gapped open, pulled back into the gap window and exploded higher.

3) In Weakness, Opportunity is Found

Our friend, Kurt Capra provided an interesting take on yesterday’s bearish candle on Facebook (FB):

So, Facebook (FB) reported earnings after the close on Wednesday leading to a gap up Thursday morning to new all-time highs.

After dancing around the first 2 hours of the day, FB began to pullback into the gap. It proceeded all the way down, finally finding support at $124.00, leaving the daily chart with a large red candle.

To most, that would be seen as bearish.

But, if you look beyond face value, it is an opportunity to get long for a ride back to, and through all time highs.

Why would this be case?

Take a look at the hourly chart from today and you’ll see a pullback and double bottom.

So, the red bar from Thursday was nothing more than a controlled pullback to support and the whole number ($124); nothing to be scared of. In fact, quite the opposite.

To the trained eye, this is an opportunity to get long, from a great spot, and enjoy a ride back to, and through, all time highs.

If fact, if you go back and look at the daily chart of FB, notice how many times red bars were negated within the next day or two?

This is a powerful concept that combines multiple timeframes with pattern recognition; something all traders should intimately understand.

P.S.- If a double bottom fails, it can be an even bigger opportunity…even in failure, there is opportunity!!