Very choppy intraday action. But once price got above the inflection level, it pulled back and price had a strong close.

1. Negative earnings
reaction reversal
Catalyst: Earnings beat, lowers guidance
Setup: Negative earnings reaction reversal
Trades: EOD Trend PB
Ticker: GE
Date: 24-1-23

2. Bigger picture: SPY and VIX
Intraday levels SPY:
After two consecutive
>1ATR days, today there
was a range day. This only
occurs 8% of the times, it’s
very rare. Choppy price
action.
VIX level : 20
VIX closed just below 20.
Let’s see if it can reclaim 20
tomorrow.

3. Gameplan
1) Catalyst. What is the catalyst? & Intraday fundamentals
earnings beat, but not a very strong one. Also lowers expectations for 2023. Atr: 2.21
1B float, 70% io, low short %.
gap : -1% very choppy premarket.
2) Setup. What are potential setups. What are the playbook indications & statistics I have for these setups?
Compare. Does the setup match the catalyst? How does this setup compare to your other playbook setups,
grade/rank them.
Normally an earnings beat is good. But we guide lower. Therefore, I think this setup matches well. If would have been
even better if it was a complete miss.
3) Technicals & volume. What is the current momentum burst day/%move, what is the technical setup called. What
does the daily look like? Any recent/prior gap ups/downs. Has it a lot of big trend days? Data of ATR moves? Look
for repetitive price action and similar setups! If possible, look at intraday price action!
Premarket volume is very promising: 15.8%. Technicals are strong. Very big uptrend since the start of this year +20%.
Up +60% since October.
Daily volume has been very significant. Pull in volume is a bit high.
4) Key levels. Identify areas of interest. These are prices a stock will tend to trade to, after they had a catalyst. If a
stock can move through these levels, they may have an explosive move. Is there an inflection level?
80 dollar will be the key level for long trades. Below 75 dollar there’s amazing downside potential. Above 81 there’s a
lot of upside potential
5) Where are we likely to open? How close are we to the next important levels in terms of ATR? VWAP?
78-79. Below VWAP, closer to the upper bounce. Could spike into 80 and trade down.
6) PLAYBOOK TRADES what trades fit this catalyst + setup + technicals + volume & market environment that are in
line with my playbook?.
I think we are most likely going to have a red outside range day. That would fit the weak catalyst but technical
strength. We must be extremely weak and trade below 75.70 and then I would be looking more for a trend day.
I don’t have a strong enough bias to call an open trade.
7) Risk and opportunity grade. How would I grade this opportunities (A,B or C). Would this deserve more risk?
Premarket volume is very high. Premarket is very choppy. I think a reversal is not very likely and I am short biased.
There needs to happen a lot before I will switch to long.
In the most likely scenario of a downside range day the only trades I will be looking for is trend pb’s.
If the gap down were more extreme and we weren’t a strong on the daily, I would prepare for perhaps VWAP pull in’s
or wedge patterns. Now I want to see intraday price action not be weak first.

4. Catalyst &
Fundamentals
Catalyst: Earnings beat, guides lower.
Setup: Negative earnings reaction reversal.
Premarket pre buzz: 15%
Float: 1,09B.
Institutional Ownership: 71,9%
Short %: 1,38%
ATR: 2,21.
Average Daily volume (50 day): 6,7 million.
Daily volume: 13,4 million.
Gap%/Gap ATR: -2,22% / 0,8ATR
RVOL: >3

5. Daily PB: UP PB BO MBD2
Strong technical pattern.
Has elevated volume. Pulls in
9EMA, bounces and pushes
higher.
Very clear support area, even
though GE looks extended
people were willing to buy at
the low of the PB. No mean
reversion setup.

6. GE & NFLX : similar intraday price action
Similarities:
-Unclear catalyst and strong technicals.
-Choppy price action, no sings of a clean trend.
-Infliction level for long trades.
-Reclaims this level on elevated volume EOD.
-Close on strong elevated buying.

7. Technical
Analysis:
Trend PB
10m holds above 9EMA,
5m holds above 20 EMA.
Shallow volume during PB
Pullback visible on multiple time
frames: 1m, 5m, 10m.
Bounce of key level: 80
Elevated volume when PB
starts to work.

8. Trade management
EOD trend PB
-25% entry
-risked 9 cents, made 28.
I thought this was a
move2move trade, and
therefore I panic sold.
I scored 36% on spencer’s
performance measurement
which is underperformance.
But my main focus right now
is trading playbook trades
and finding good entries.

9. First trend PB
I took 3 entries and lost -1.45R
entries:
1) 36.4% -1R
2) 6.8% -0.45R
3) 23.1% 0R
Solid execution. But was this a good
playbook setup??
-Unlike the EOD PB and NFLX PB this
reclaim of technical level didn’t have
strong volume.

10. TIME OF DAY
Trend PB's
n 31
Before 11AM 6,5%
11AM-12PM 16,1%
12AM-13PM 35,5%
13PM-14PM 6,5%
14PM-15PM 25,8%
after 15PM 9,7%
Most of the setups occur between 12AM and
1PM. And there are almost no setup that occur
between 1PM-2PM. 12-1PM is considered a
slower market period. For a PB to setup at
13PM, it must trend before 14PM.
Therefore, the low % of setups between this
hour makes sense.
The setups that did occur within this period
were COIN, which was trending very nicely and
bounce of the OR high and DOCU D2 which
was of course very strong.
Conclusion, I should not have traded the first
PB on GE, which barely had a strong trend
preceding, on a ticker that wasn’t very bullish.

11. What could I have done
better?
• Haven’t had a negative earnings reaction reversal setup like this. It
occurred on DFS. There we had a big gap down after an earnings
beat, and no guidance lower. It was an over reaction of the market.
But GE gapped down only 2%, there was no overreaction. But it did
bounce of a strong support level, and the technicals were very
strong. When there’s negative reaction + strong technicals + a
catalyst that isn’t extremely weak  Prepare reversal scenario!
I did well on preparing the infliction levels for long and short trend
trades.
• The (small) data sample is clear: no PB trades that make a low
between 13-14, unless the setup and trend are very strong/weak!