LVS hit our radar for a Spencer (my trading partner) 2nd Day play.  There was not much a news catalyst in LVS, but yesterday it traded a higher RVOL, finished near the bottom of its range, and traded significantly weaker than the market.  We walk onto our trading floor today wondering if there will be follow through or a bounce from support at 44.

Where is support?  We look to our longer term technicals for this answer.

On a Daily chart, we find 44 as a support level in LVS.  We think: could it drop on the open to there and bounce off of support?  We overlay a trading pattern from our PlayBook for such a trade.  We do not just buy.

Let’s examine an intraday chart of LVS today and see if there is a trade near that 44 level.

As you can see from our intraday chart, LVS blows through 44.  One of our new traders, literally Day 2 for him, asked why 44 did not hold if that was support.  Well it did.  It just did not the way he expected.  It leaked through 44 before it held.  Why?

a) Time of Day.  Stocks can leak through support during price discovery on the open.

b) Distance traveled.  Stocks can leak through support when they travel a far distance to support.

c) Think of areas of support and not support.  Support can be an area of support and not an exact price.  The area of 44 can be support as opposed to 44 period.

d) Closing prices.  Closing prices are most important and certainly more important than intraday ticks.

So what is the trade off of this 44 support area?

2nd Day Support Trade: Buy 44 with a stop below the low wick under 44.  Sell into strength above 45.  Pass on adding size into the consolidation at 44.60, because of price.

*no relevant positions