Here is a setup to help you during earnings season: A stock gaps up or down on earnings and drives strongly in one direction during the first few minutes of the Open.  This stock should be In Play for the rest of the day.  The large supply/demand imbalance that is indicated during those first few minutes should create a bunch of great risk/reward trades throughout the day.

Take a look at the chart of BBBY below.  It gaps up about 3.5 points to 29.  During the first few minutes of trading it pushes up to 30.  There is a small pullback and then it moves powerfully above 30.  The 30 level then becomes support for the next leg up.  There are a series of good trades the rest of the day.

My overall bias was on the long side but I recognized that when resistance levels formed, such as at 31.60 that there were nice chops to be made on the short side as well.  But always in the back of my mind was the idea that BBBY should finish close to the high of the day.  That initial upward surge on the Open and the lack of a reversal during the next few hours meant that the easiest path of resistance would be up into the Close.

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