Swing and Day Trading: Evolution of a Trader

CHAPTER 5

Event Pattern Setups

Have you ever felt like telling an analyst to keep quiet (to be polite), because what he or she said just sliced big bucks off your net worth? Whether it is a downgrade or new guidance on a company’s prospects, analysts’ words can send a stock tumbling. However, each move provides the nimble swing trader with an opportunity to profit.

When stocks make similar patterns because of repeatable events, I call them event patterns. For swing traders, these events might be as delicious as peanut butter and jelly. However, event patterns are a treacherous bunch because the move after them often does not last long and there is a wide variation in how each stock behaves. This chapter takes a closer look at several of the more common event patterns.

Let the trading setups discussed in this chapter serve as kindling for a fire of ideas. Use those ideas to build and shape a robust and effective trading plan that will make you big bucks. If that does not happen, then be sure to have children that can take care of you when you get older.

For a complete treatment of event patterns, refer to the latest edition of my Encyclopedia of Chart Patterns book.

COMMON STOCK OFFERINGS SETUP

In Fundamental Analysis and Position Trading, Chapter 11 reviewed some of the findings related to common stock offerings. If you are serious about swing trading this event pattern, then review the material under the heading “Event Pattern: Common Stock Offerings” in that chapter. This section ...