Today in our SMB Real-Time I chatted that I liked the EBAY setup. It had formed an intraday bull flag. I started asking traders around me if they were in it, which is my way of hinting perhaps they should be. A few were. I asked a few of the guys how big they were. This is my way of hinting they should consider getting big. EBAY broke above the top of the consolidation. On my new platform my alert went off.  Iceman called out he was getting bigger. I asked again who was in it and how big in a voice more urgent. This is my tone and way of saying “This is an opportunity, boys. Check it out.”

The desk was still too light for my taste. I walked around to those who were in it. I wanted to know why we weren’t bigger as a firm and why some individuals hadn’t loaded up. I’m not implying that this trade was definitely going to work out or that it was a must long. It was an excellent risk/reward opportunity that was worth the intellectual, emotional, and capital capital of our traders. It was a trade worth significant risk.

Visiting with one trader, he remarked that he has a bad history with EBAY. Noted.

Visiting with another trader, he chirped that he was not sure of the risk to add above the top of the consolidation at 30c. Noted.

Visiting with another trader, he was hesitant about buying too far above the breakout price. Noted but watching as the stock was not finding this price and trading higher.

But mainly you could see that some undervalued that this bullish flag pattern was more likely to work. We discussed why with our newest class in teaching session after the open. We came up with a list of variables that made this bullish flag pattern more likely to work. See Figure 1.1 below.

Not every bullish flag pattern is the same. Dig deeper into each one to taste the nuance for why some are more likely to work. This was one of those opportunities.

Figure 1.1

Tomorrow you can be better than today!

Mike Bellafiore

The PlayBook

One Good Trade

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