{"id":2187,"date":"2024-03-16T12:05:54","date_gmt":"2024-03-16T12:05:54","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/16\/how-to-profit-from-bullish-gap-down-reversals-2\/"},"modified":"2024-03-16T12:05:54","modified_gmt":"2024-03-16T12:05:54","slug":"how-to-profit-from-bullish-gap-down-reversals-2","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/16\/how-to-profit-from-bullish-gap-down-reversals-2\/","title":{"rendered":"How To Profit From Bullish Gap-Down Reversals"},"content":{"rendered":"
\n

The S&P 500 ended the week with a slight pullback that has this Index closing below its key 10-day simple moving average, but above its 21-day moving average. With the RSI and MACD in positive territory, the near-term uptrend in this Index remains in place.\u00a0While last week\u2019s orderly price action is in line with four other nominal pullbacks we\u2019ve seen so far this year, there\u2019s been plenty of turbulent price action beneath the surface,\u00a0as investors have responded sharply to several high-profile companies after the release of their earnings reports.<\/p>\n

Daily Chart of S&P 500 Index<\/span><\/p>\n

For many who follow my work, you\u2019ll know that I\u2019m quite bullish on gaps up in price after earnings, as they often lead to further upside after a period of consolidation to digest the large gain.\u00a0A prime example would be Shake Shack (SHAK), which gapped up in price after the release of strong earnings in mid-February, which pushed the stock out of a base and into an uptrend. SHAK was a part of my MEM Suggested Holdings List <\/a>just prior to the release, and it remains on our buy list as it\u2019s in an uptrend.<\/p>\n

Today, we\u2019re going to focus on stocks that gap down after earnings but then go on to reverse that gap down. These stocks will generally have more work to do before entering a new uptrend; however, shorter-term investors can take advantage of any reversal if using the proper intraday chart to guide your entry.<\/p>\n

Let\u2019s take a look at Switzerland-based footwear company On Holding (ONON). The stock gapped down 18% on Tuesday after reporting earnings that were below estimates. As you can see on the daily chart below, investors came in on the dip so that it closed the day down 8%. The stock has continued to trade higher, and ONON is now in an uptrend.<\/p>\n

Daily Chart of On Holding (ONON)<\/span><\/p>\n

As investors begin to buy the stock on the dip, shorter-term investors will want to keep a close eye on a 15 minute\/intraday chart.\u00a0Using the same indicators as on a daily chart, the first positive signal would be a close above the 5 and 13 simple moving averages.\u00a0From here, you\u2019ll be on the lookout for confirmation of an uptrend by way of the RSI moving above 50 and into positive territory. For ONON, this took place in the $30 range. In order to stay with the trade, both signals would need to remain in place which, in this case, would have netted 10%.<\/p>\n

Intraday\/15-Minute Chart of On Holding (ONON)<\/span><\/p>\n

As noted earlier, the broader markets are in an uptrend and, while constructive, the Technology sector is close to turning negative after several heavyweight areas came under selling pressure last week.\u00a0For those who\u2019d like\u00a0insight into what\u2019s taking place within this leadership area of the markets, use this link here to take a four week trial <\/a>of my twice-weekly MEM Edge report at a nominal fee. You\u2019ll also receive information relating to rotation taking place elsewhere in the markets, as well as alerts to a reversal of the current market uptrend.<\/p>\n

Warmly,<\/p>\n

Mary Ellen McGonagle<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The S&P 500 ended the week with a slight pullback that has this Index closing below its key 10-day simple moving average, but above its 21-day moving average. With the RSI and MACD in positive territory, the near-term uptrend in this Index remains in place.\u00a0While last week\u2019s orderly price action is in line with four […]<\/p>\n","protected":false},"author":0,"featured_media":2185,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-2187","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2187","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=2187"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2187\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/2185"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=2187"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=2187"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=2187"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}