Each morning before the market opens we review stocks that have fresh news catalysts. We call these stocks “In Play”. When a stock has what appears to be a positive catalyst and yet is trading lower in the pre-market we take notice. Sometimes a stock with a positive catalyst will be trading lower because it has recently run up prior to its earnings’ report. But occasionally the market will just get it “wrong” initially. It is a lot easier to push a stock higher or lower in the pre-market when there are very few participants and liquidity is minimal.
I was happy to buy PEP any price below 107 and the closer to 106 the better. Confirmation that the trade was working would be a “hold” above 107. Here is how PEP traded this morning.
Here is the discussion from our pre-market meeting.
We discuss excellent risk/reward setup each morning in our AM Meeting. Find out more information HERE.
Steven Spencer is the co-founder of SMB Capital and SMB University which provides trading education in stocks, options, forex and futures. He has traded professionally for 21 years. His email address is: [email protected]
no relevant positions