Flat Open Strong
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spectre
Description
# Description
These are stocks that are above the SMA 50 and AVWAPE with medium term RS and they are also on a M15 buy trade signal. They have not moved outside of their current 20 day ATR, are above VWAP, and are in the upper half of their established range for today. These stocks also do not have any upcoming earnings within the next 5 days.
# Purpose:
The purpose of this search is to scout out for potential grinders for the day that have had relatively flat opens. From the article in “The System” on How to Find the Best Day Trading Patterns (https://oneoption.com/the-system/stock-second/short-term-technical-analysis/how-to-find-the-best-day-trading-patterns/), we know that stocks with relatively flat opens and/or stocks that are not stacking massive candles in the first hour have the potential to make very steady and orderly moves higher all day long. In reference to the “Stock price patterns (M5)” in the above diagram, this search helps us find those blue patterns (solid blue and dotted blue lines).
# The problem with stocks that make big moves at the open (gaps up and/or very tall stacked candles)
The problem with stocks that gap up at the open and/or stack very tall candles (skyscrapers) very quickly is that the move will attract profit taking from those who are long overnight or longer term. That profit taking provides natural selling pressure. In addition to that, what ends up happening is that that early move higher ends up being the move for the day. The stock will oftentimes end up moving around with a choppy and volatile cadence between VWAP and the HOD. Because of these factors, intraday RS tends to also be much more difficult to properly gauge (especially on inside days / LPTEs).
# How to use this search
I like running this search during the first couple of hours during the day, but it works well later in the day too to find stocks that were digesting recent gains earlier in the day after a big move. Many of the results in this search will pop up with a low RVOL. Don’t disregard them–watch them closely, especially if they have nice D1 charts and are in a nice medium term trend higher (look at M15 and M30 chart). Many of these low RVOL stocks will pick up volume as the day progresses (make sure you use RRV as well to measure volume).
# What to look for
1. Measured from the stock open to the current price, the stock is making a directional move at no more than a ~45 degree angle
2. The stock should hold its own well when SPY pulls back. When SPY is flat or grinding higher, the stock should be inching its way higher