I made this very simple tape trade on the Open today. SPLS was gapping lower on earnings. The sector has been decimated recently and my initial instinct was to look to short on the Open. As the market opened I got short but a buyer stepped in at and I covered. On the chart below I have highlighted where the buyer held the bid at 12.82. The buyer stepped higher to 12.85. I still liked the short as long as it was below 13 but I didn’t want to fight the buyer so I waited.

When the buyer dropped at 12.85 I offered at .85 and got short. My stop was above 12.90. I covered my risk into the first down move and covered the majority of the trade when 12.60 began to support. My final bid was placed at 12.32 and executed after I had left the desk. My primary reason for getting involved is this was a nice setup for the younger traders on our desk and part of our job is to trade setups that they can easily follow.

This trade was highlighted on the SMB Real Time chat where our traders and subscribers can follow along.

Steven Spencer is the co-founder of SMB Capital and SMB University and has traded professionally for 16 years. His email is [email protected].

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