The document discusses the "Gap and Go" trading strategy, where a stock gaps up or down at the open due to news or a catalyst and then continues moving in that direction. It provides examples of Keryx Biopharmaceuticals (KERX) stock gaping up significantly after positive drug trial results. The document analyzes KERX's technical charts and price action throughout the day, identifying support and resistance levels and discussing entry and exit points based on the stock holding above or breaking key levels. It emphasizes looking for buying volume and confirmation of breaks rather than low volume spikes.

1. The "Gap and Go" Trade
Ryan McGaw
KERX
Ticker:
Date: January 28, 2013

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4. Gap and Go Defined
The Gap and Go trade occurs when a stock gaps higher or
lower before the market open and is able to hold the gap
early in the day and continue further in the direction of
the gap.
The gap usually occurs due to a catalyst that attracts
buyers or sellers and puts the stock in play.
If a stock gaps up, consolidates and holds higher than the
initial gap level (the opening range) it indicates a very
strong stock and further upside.
If a stock gaps down, consolidates and holds lower than
the initial gap level (the opening range) it indicates a very
weak stock and further downside.

5. Gap and Go Strategy
The strategy for trading a bullish gap and go is to find areas
where the stock is consolidating above the gap or levels
where it is safe to enter on a pullback to prior resistance
that can act as support.
Once the stock can break above the consolidation you
have a well defined entry and should expect the stock to
quickly find higher prices on the breakout.
Adding at places where the buyers are able to hold the bid
above the consolidation break gives room to add size
with clearly defined risk.

6. Big Picture
The SPY has been in grind up mode for most of
this month with gap downs being bought and
support levels acting well.
Today we had an inside day and closed right
around 150, off the highs of 150.20.
The pattern has been selling on the open and
buying the rest of the day..just like today.

7. Intraday Fundamentals
Shares of Keryx Biopharmaceuticals Inc. soared Monday after the drug
developer said its potential kidney disease drug, Zerenex, performed much
better than a placebo in a late-stage clinical trial.
The New York company said it plans to submit an application for approval of
the drug to both the U.S. Food and Drug Administration and European
regulators in this year's second quarter.
Zerenex met its study target for lowering phosphate levels in the blood of
patients with kidney failure. Patients on Keryx’s drug showed a statistically
significant reduction compared with those trial participants who were given a
placebo. (As kidney function deteriorates, blood phosphate levels rise.)

8. Company Description
Description
Keryx Biopharmaceuticals, Inc., a biopharmaceutical company, focuses on the acquisition,
development, and commercialization of pharmaceutical products for the treatment of renal disease in
the United States. It is developing Zerenex (ferric citrate), an oral, ferric iron-based compound that
has the capacity to bind to phosphate in the gastrointestinal tract and form non-absorbable
complexes. Zerenex is in Phase III clinical development for the treatment of hyperphosphatemia in
patients with end-stage renal disease on dialysis. The company has sublicense agreement with
Japan Tobacco Inc. and Torii Pharmaceutical Co., Ltd. for the development and commercialization of
ferric citrate in Japan. Keryx Biopharmaceuticals, Inc. was founded in 1997 and is headquartered in
New York, New York.
AVG Volume: 2.55M
ATR: .61
FLoat Short: 15.61%

9. Technical Analysis-Long Term

10. Technical Analysis-Short Term
Important 5 level

11. Trade Management
late day
initial push higher is trendline
a point move and a break and
place to cover risk momentum add then range
for added size and break..flat
possibly some of the
core
Huge Gap
up from 3.50 possible to play the
momentum above shallow pullback holds
5 is selling but
pre market highs the trendline..no reason
soon gets lifted
and keep it tight by 2 sell yet..buy back some
and is able to
hitting out more stock
hold above prior
than you add if it
to the open now holding above the 5 level and
fails..cover risk into consolidating..good entry for initial
.50c size or add if you have some from
lower..as long as it is above the level
this is a trade 2 hold and you need a
reason 2 sell the core
when 5 drops it it might be hard to be thinking long when the
stock is below the pre-market levels almost half
is time to look on the open KERX way into the day but now the levels are being
for support and dropped 5 but found regained and you have a well defined stop below
a place to get support around 4.75 the lows and you have to remember the catalyst
involved on the and formed a nice and imagine what is possible for the stock
side of the rounding bottom
gap..in this case
long

12. What you want to see on the tape
●When watching a level, best to see
buying NEAR the level
●This gives you a tight stop if you are
wrong
●Increases the chance of a breakout
●Signals the buyers are willing to buy
higher

13. What you do not want to see
• Price spike on low volume clearing the
level you are watching
●Too much risk
●Need to see the stock hold above the
level
●Develop criteria for what you want to see
before a stock breaks an important level

14. Contact Bella
• mbellafiore@smbcap.com
• @mikebellafiore