After the close yesterday CREE reported. Immediately CREE traded lower from 53ish to 47.50. But there was a level more important than all others. I tweeted it. Twice! And it was the level of all levels.
Besides cherry picking an example to pump myself up 🙂 how do you find this most important level? Mike don’t I just look on my long term charts and find these spots? Nope. Mike don’t I just take out the 200MA and trade from there? Nope. Bella don’t I overlay Fibonacci indicators and sit back, relax, and enjoy the ride? Nope. Well sometimes.
Levels after important events are what I am after. Yesterday CREE held the longer term 47.50 level. It didn’t really hold it so much as it never went below. 48 was important. 49 and 49.20 were not uninteresting. But it was the 48.60 level that was most important. Why?
So CREE traded much lower in the AH (after hours). 47.50 is a long term support level. After the downmove there was a battle at 48 with the buyers victorious. Then CREE had trouble trading above 48.30. We cleared this level. And now for those versed in AH trading it was higher ground until a serious seller stopped us.
Well at 48.60 we found this seller. 48.50 was a huge buyer as well. And the buyers and the sellers fought. Man did that offer hold at 48.60. Finally the 48.50 bid dropped and we traded lower. There was a ton of volume done at 48.60. But there was something more. Psychology.
The longs were paying and paying hard as they expected 50. The seller was sticking his neck out as CREE was starting to go back up. And the seller just stuck the offer.
So we had a seller at an unexpected price. We had a seller who was getting in the way before 50, so at a much lower price than we expected. CREE was starting to go back up, dare I say starting to trend up AH? There was a ton of volume done at 48.60. And initially CREE failed hard from this price. And the sellers just putting the breaks on at this 48.60 level. Strange.
So that is how we found that level.
Mike Bellafiore
Author, One Good Trade
2 Comments on “CREE, 48.60 and How You Find the Most Important Level”
Could you attribute that overall market for that level to work? If the market is going up, trades2hold at a level work?
This is an interesting blog post to me because I’ve had this question for many months now… I understand that you can identify important levels if you are watching the tape.. but is there a way to go back and look at the prints after market close to find important levels in stocks for the day… are you guys developing anything like this? I have an idea for how to do it, but I need access to a good computer programmer which I haven’t been able to find.