On Tuesday, we sent out a BGU report highlighting Palo Alto Networks' (PANW) buyable gap-up move that morning. At that point in time, the stock had set a 152.15 intraday low, as note in the report, but later in the day failed to hold that low, closing lower after setting a second, final intraday low at 149.00. This illustrates the fact that a) BGUs are not always so cut and dried, and b) allowing 1-3% porosity below the initial intraday low can help to keep one in the stock. Note that after setting the second intraday low at 149 on Tuesday, PANW then held above that low on Wednesday. Thus the BGU remains in force using the 149 low as your selling guide.
Another note: as active traders, sometimes our approach would be to buy the stock on the basis of the first intraday low at 152.15, but then quickly sell once it does not hold that low, and then be willing to come back into the stock once it sets a final low at 149 and holds it the next day. This is an alternative to allowing for 1-3% porosity below the initial low and is something to consider if one wants to take a highly active approach to handling BGUs. Finally, unrelated to the BGU, note that PANW undercut the prior September low in the pattern and rallied six trading days ago on the chart. This is a classic undercut & rally (U&R) move, also known as "Wyckoff's Spring" for those of you familiar with the work of Richard D. Wyckoff, the "W" in the the "OWL" trading methods that we like to use. In this market, the U&R is in fact a potent weapon that is far outside the realm of buying breakouts, but very effective in producing sharp upside moves that are trade-able on an intermediate basis, at the very least.
Buyable Gap Up - Follow-Up on Palo Alto Networks (PANW)
|Published:||23 Nov 2017 14:56 ET|
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.