Admittedly, I'm out of rhythm this week. Working from different locations without my usual setup or when I have my usual setup, working with limited internet speed or data feeds. It's what I'd call "less than ideal."
Through three days, I've been limited to a single scalp trade on Uber (UBER) Wednesday morning. Intraday scalps based on five-minute charts are my focus from a trading standpoint, but the situation is what it is and will hopefully be resolved today. At least, that's why I think there are guys with shovels digging around outside.
I felt as though the Uber bounce was telegraphed clearly for traders today. Bad reaction to earnings Tuesday followed by a lock-up expiration today that came complete with a 2 million share block at $26.90 after the stock closed around $28 yesterday.
The stock began selling off in the pre-market, every headline screamed bearish and end of the world as the shares trickled all the way to $26. A whoosh at the open took us to $25.58 and I'm thinking to myself, "this is too easy for the bears."
Chances are the participants in the 2 million block trade won't simply roll over and let this fade to $24 or even $25 Wednesday. All the news and early reaction points to easy downside, but when things look the easiest, the hardest trade can often be best.
It's not as though lock-up expirations are a surprise or an unknown catalyst. They generally only pressure a stock one way -- down -- unlike earnings that can push shares higher or lower.
When we have an extremely volatile name, though, the actual lock-up release day can be tricky. Uber shares have been absolutely destroyed already since coming public. Underwriters cleared out 2 million shares in a single push. Wednesday morning created the perfect setup for the fade, in this case, the push higher.
The easy-hard bounce is likely past us now, and this isn't about hindsight, but foresight for the next unicorn lock-up expiration. If the bears lean too heavy into the days before and the pre-market of, then one needs to consider watching the stock for a scalp trade.
This isn't about long-term or even a few days. We're talking hours or sometimes only minutes on this type of play. I simply watch for a five-minute closing bar above the open price, then place a stop based on a closing bar, a percent or two below the closing low of the lowest bar of the morning.
If the shares move higher, then use your trailing stop of choice or profit target. I tend to stick with a parabolic stop-and-reverse or Full Stochastics system, but a five-period trail could work or two-bar low. Just don't overthink it.