TGI

I added some more TGI yesterday at $26.96.

On the opening pop TGI  yesterday set a new high of $27.33 and on a break of that I will add more.

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This post has several things to teach new traders.

Let’s start with the two blue parallel lines you see on the chart. These are enclosing the price action after the pop up on 9/22. We will get to the tails in a few minutes.

This formation is called a bull flag. When you are in an uptrend, which is in question here because this is only the second day of a reversal, the buyers will stop for a time and the stock will trade sideways and slightly down.If the flag is slightly rising it is much more likely to fail and the stock goes lower. If I were not already in this stock I would not buy until it broke through $27.33, which is the high of the pop after the reversal on 9/21. The buyers that are in here now are probably shorts who are covering their position. If we break through $27.33 we should get a strong short covering rally.

Let’s move on to the opening bar of each day. In a stock with no new news a falling stock will very often pop up a few cents at the open. Conversely, a stock that is rising will often fall a few cents at the open. What this is is the market orders to be executed at the open. Those market orders allow the market maker free reign to do as they please with your order at the most volatile time of day. Bear in mind the MM (market maker) has tons of information that you don’t have access to or don’t understand the importance of.

So on a falling stock the MM  moves the price up a little and you (buy at market at the open orders) buy higher than yesterday’s close. He, meanwhile, shorts your buy and then lets the stock continue lower. He covers his short a little later and pockets the change. That 5, 10 or 50 cents may be on a few thousand shares or 100’s of thousands shares. Those are the little pops up or down (rising or falling stocks) that you see at the open. Because these are not informed trades I pay no attention to these tails when I’m drawing lines on my charts.

I am normally at the computer at the open every morning and it gives me confidence to see these little opening moves.

Dave C

 

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