My buddy, Bullish Jim, and how can you not like a guy with a handle like that, brought up LQDT and the fact that he sold it the other day ahead of earnings but the stock, after a drop at the open yesterday morning, went up anyway. Jim made the right decision in the circumstances but I wish I had seen this stock yesterday morning (I'm still fighting this blankety blank cold so I'm doing more thinking than trading these past few days).
It did a very nice fly-by of the S1-S2 mid-point (19.35) and that would have keyed a buy but that was way too complicated. When I switched to the 30's (my other favorite trading frequency) it had a drop-dead gorgeous "buy me" set-up.
I described this set-up way back last year and I'm too lazy to go find the post so here it is again. This time using LQDT.
First there is a gap down which is one of my favorite starts and, from experience I know that a gap down on good earnings usually means the stock has a high probability to recover some of the gap. After the gap-down there is instant remorse and capitulation which is shown in the first candle. Watch for this - it is trader talk for "we've gone too far." Then a "dummy spot" or what I call a "Buy Me" spot and what the Japanese call a DOJI formed. This is followed by a white candle with good volume which is kind of the "please" part of the set-up - not always present but nice if it happens. Then, once a clear break of the "Buy Me" spot occurs - you buy. The stop should be placed below the buy spot using an increment of the 30-minute chart ATR.
Note - the Average True Range will vary depending on your chart period - be sure you are being appropriate to the time scale.
Also - set-ups taken from 30-minute charts have stronger runs in general than those taken from the 15-minute charts.