{"id":6870,"date":"2010-09-03T10:00:54","date_gmt":"2010-09-03T14:00:54","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=6870"},"modified":"2010-09-03T10:01:23","modified_gmt":"2010-09-03T14:01:23","slug":"one-of-my-favorite-plays","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/one-of-my-favorite-plays","title":{"rendered":"One Of My Favorite Plays"},"content":{"rendered":"<p>When I was younger I played a lot of pickup basketball. \u00a0Many times I was matched up against players who were either bigger, stronger or quicker than me. \u00a0Well maybe not stronger \ud83d\ude42 \u00a0I found playing &#8220;up&#8221; to my competition was much more enjoyable than playing &#8220;down&#8221;. \u00a0Playing better competition tends to heighten your focus and forces you to improve as a player. \u00a0I would make mental notes about various opponents so if I faced them in the future I was better prepared to take away their strengths and exploit their weaknesses.<\/p>\n<p>In trading you don&#8217;t necessarily want to find the toughest competition. \u00a0It is not necessary nor desirable to pick the most erratic and illiquid stocks to trade each day. \u00a0Nor should you focus on the most convoluted set ups that require mind bending analysis to figure out how to best trade your position. \u00a0Where trading most closely matches up to my basketball analogy above is with respect to learning about your competition.<\/p>\n<p>I have always been a fan of trading momentum stocks for this reason. \u00a0Momentum hedgies flock to these names as quickly as zero hedge flocks to a governmental default rumor. \u00a0As a trader it is important to understand which setups the hedgies like best. \u00a0One such setup began to unfold earlier this week in CRM. \u00a0If I had to give it a name I would call it a Secondary Earnings Momentum Play. \u00a0After a large runup on good earnings hedgies will accumulate the stock on any weakness in the days following the runup. \u00a0This accumulation creates a clearly defined range, which if it breaks can lead to a sizable multi-day move.<\/p>\n<p>On August 20th CRM gapped up on better-than-expected earnings. \u00a0It closed near its high on huge volume. \u00a0During the next week it consolidated in a fairly tight range. \u00a0By the time I returned from vacation on Monday it appeared ready to begin its next up leg. \u00a0Based on observing the recent price action I determined that if CRM got above 113.40 on good volume that it was beginning to make its next up move that should take it to 118 or higher.<\/p>\n<p>Why does this play work so well? \u00a0In addition to all of the momentum hedge funds who are watching CRM you have a ton of other market participants who are keeping tabs on the momentum names. \u00a0There are the retail traders who are checking all of the top IBD stocks on a daily basis. \u00a0Professional traders are scanning the highest beta names for good technical setups each day as well. \u00a0Momentum stocks are also all over the Stocktwits recommended stream being \u00a0pushed by heavily followed traders such as @Traderflorida.<\/p>\n<p>One thing in particular caught my attention on the weekly chart when I was preparing to write this blog. \u00a0There was a ton of volume done in CRM in the week it consolidated after the big move from earnings. \u00a0I drew a couple of conclusions from seeing such heavy volume following earnings. \u00a0One, a lot of people who wanted to exit were able to do so and would therefore not be a hindrance to the next up leg. \u00a0And two, there were some seriously committed buyers in this stock after earnings for it not to have had a steeper retracement after such a large up move.<\/p>\n<p>My 113.40 price alert was triggered on Wednesday, which also happened to be the day the market had broken its most recent downtrend. \u00a0Strong stock and strong market generally are a good combo for a successful breakout.<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-break1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-6892\" title=\"crm break\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-break1-300x210.png\" alt=\"\" width=\"300\" height=\"210\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-break1-300x210.png 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-break1.png 500w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-daily.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-6893\" title=\"crm daily\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-daily-300x210.png\" alt=\"\" width=\"300\" height=\"210\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-daily-300x210.png 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-daily.png 500w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-weekly.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-6894\" title=\"crm weekly\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-weekly-300x210.png\" alt=\"\" width=\"300\" height=\"210\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-weekly-300x210.png 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2010\/09\/crm-weekly.png 500w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When I was younger I played a lot of pickup basketball. \u00a0Many times I was matched up against players who were either bigger, stronger or quicker than me. \u00a0Well maybe not stronger \ud83d\ude42 \u00a0I found playing &#8220;up&#8221; to my competition was much more enjoyable than playing &#8220;down&#8221;. \u00a0Playing better competition tends to heighten your focus and forces you to improve &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/one-of-my-favorite-plays\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":143,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,453],"tags":[1352,498,526,796,1005],"class_list":["post-6870","post","type-post","status-publish","format-standard","hentry","category-steven_spencer_steves_blogs","category-trading_ideas","tag-favorite","tag-my","tag-of","tag-one","tag-plays","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>One Of My Favorite Plays | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/one-of-my-favorite-plays\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"One Of My Favorite Plays | SMB Training\" \/>\n<meta property=\"og:description\" content=\"When I was younger I played a lot of pickup basketball. \u00a0Many times I was matched up against players who were either bigger, stronger or quicker than me. \u00a0Well maybe not stronger \ud83d\ude42 \u00a0I found playing &#8220;up&#8221; to my competition was much more enjoyable than playing &#8220;down&#8221;. \u00a0Playing better competition tends to heighten your focus and forces you to improve ... 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