07/27/2022
You might already know that Chris Hood and I do quite a bit of live trading together throughout the week…
And yesterday, it dawned on us that a lot of folks still use stop losses for every trade they put on — despite our continuous admonishments.
Frankly, it’s like showing your hand at the poker table…
It’s hard to win like this.
On the other hand, “mental stops” and price alerts can keep you from leaving your trade at the mercy of market makers and robots.
Stop loss raids are all too common and — if you’re one to trade small caps — you’ve likely seen this one too many times…
The good thing is that if you’re not in a position, you can take advantage of the inevitable bounce.
Under the microscope today is LumiraDx Limited (LMDX):
Today’s chart is on the 65-minute time frame.
As I mentioned, this is a “quick trade” idea.
And with the personality of stocks like LMDX, it can be much quicker than you think…
Before we really dig in, I want to point out one glaring caveat to this trade idea. It’s something you should be aware of if you plan on taking this for a ride.
The Support channel (green arrows) is more of a line than a channel… In other words, this stock is hovering over thin ice.
You’ll notice that this is a notable contrast when looking at the prominence of the overhead Resistance channels in red.
That said, this shouldn’t be the type of thing to ward you off from putting on a position… It’s just something to keep at the forefront.
So, why do I like this as a potential trade idea?
It’s a low-risk setup so long as you are mindful of where the share price is sitting. In fact, LMDX could very well be building Support.
Stocks like these have a propensity for filling upside gaps like the one created by the drop to the left, or at least, part of it.
The Squeeze Trading Tool 1.2A recently gave a “Long” signal and the Squeeze 4-Pack v8 is three green dots in (5, 10, and 15-period). The last to go green will be the 20-period.
From here, I’d watch for a run towards the ~$1.85 area as a more conservative target. I’m basing this on the 55ema (blue arrows) since the stock has struggled with this for weeks.
The current price is squeezing tightly in a range and when this happens, it’s only a matter of time before the right burst of Volume pushes it to make a move.
Keep moving,
(Disclosure: I hold no position in LMDX but intend to initiate a position in the next 30 days.)
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
