Earnings Gap-Up Failure with an Immediate 10x ATR% Extension from the 50-MA

Earnings Gap-Up Failure with an Immediate 10x ATR% Extension from the 50-MA (eg. $Credo Technology Group Holding Ltd(CRDO)$ $Dutch Bros Inc.(BROS)$ $United Natural(UNFI)$ $Carvana Co.(CVNA)$)

I’ve strongly advocated against trading into a strong gap-up extending to 10x ATR% above the 50-MA on the immediate post earnings session. Lessons learned have shown that it’s far more rewarding to wait for a post-earnings continuation base setup, which offers a better risk-reward entry even when fueled by a strong earnings beat catalyst (a "stock in play" as PradeepBonde describes). For every 1 of such play that worked (eg. $Reddit(RDDT)$ ), there will be another 9 that undercut low to stop loss before it reset as a swing setup with flag/pennant consolidation pattern.

Extended earnings gaps of such play require careful evaluation of the trade's risk-reward proposition. The consideration of trading these setups involves chasing an already-expanded intraday range beyond ATR, which can dilute position sizing, reduce potential risk-reward, widen slippage, and ultimately diminish profitability, even if the trade works. This quarter earnings I only have $Grab Holdings(GRAB)$ and $Stride(LRN)$ as SIP post earnings play because they are the only one that qualify the fundamental beat and at the right technical spot to execute an entry and tightened risk. You can’t trade them like a slot machine—it offers zero edge.

Give good fundamentals companies the required digestion post earning's gap at extended level before it go again.

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Lessons learned have shown that it’s far more rewarding to wait for a post-earnings continuation base setup, which offers a better risk-reward entry even when fueled by a strong earnings beat catalyst (a \"stock in play\" as PradeepBonde describes). For every 1 of such play that worked (eg.  <a data-mention-id=\"RDDT\" class=\"teditor-mention\" data-mention-name=\"Reddit\" href=\"https://ttm.financial/S/RDDT\">$Reddit(RDDT)$</a> ), there will be another 9 that undercut low to stop loss before it reset as a swing setup with flag/pennant consolidation pattern. </p><p>Extended earnings gaps of such play require careful evaluation of the trade's risk-reward proposition. The consideration of trading these setups involves chasing an already-expanded intraday range beyond ATR, which can dilute position sizing, reduce potential risk-reward, widen slippage, and ultimately diminish profitability, even if the trade works. This quarter earnings I only have  <a data-mention-id=\"GRAB\" class=\"teditor-mention\" data-mention-name=\"Grab Holdings\" href=\"https://ttm.financial/S/GRAB\">$Grab Holdings(GRAB)$</a>  and  <a data-mention-id=\"LRN\" class=\"teditor-mention\" data-mention-name=\"Stride\" href=\"https://ttm.financial/S/LRN\">$Stride(LRN)$</a>  as SIP post earnings play because they are the only one that qualify the fundamental beat and at the right technical spot to execute an entry and tightened risk. You can’t trade them like a slot machine—it offers zero edge.</p><p>Give good fundamentals companies the required digestion post earning's gap at extended level before it go again.</p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/426ae1c6c2596645139e739a81bea1f7\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/561f20b7e30e6b947c88d8873a831d14\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/6e8b5eeb777b2b58694cb37207903ddf\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/e0d678210b15bc497fe8ed8abd20f1f9\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p></body></html>","htmlText":"<html><head></head><body><p>Earnings Gap-Up Failure with an Immediate 10x ATR% Extension from the 50-MA (eg. <a data-mention-id=\"CRDO\" class=\"teditor-mention\" data-mention-name=\"Credo Technology Group Holding Ltd\" href=\"https://ttm.financial/S/CRDO\">$Credo Technology Group Holding Ltd(CRDO)$</a>  <a data-mention-id=\"BROS\" class=\"teditor-mention\" data-mention-name=\"Dutch Bros Inc.\" href=\"https://ttm.financial/S/BROS\">$Dutch Bros Inc.(BROS)$</a>  <a data-mention-id=\"UNFI\" class=\"teditor-mention\" data-mention-name=\"United Natural\" href=\"https://ttm.financial/S/UNFI\">$United Natural(UNFI)$</a>  <a data-mention-id=\"CVNA\" class=\"teditor-mention\" data-mention-name=\"Carvana Co.\" href=\"https://ttm.financial/S/CVNA\">$Carvana Co.(CVNA)$</a>)</p><p>I’ve strongly advocated against trading into a strong gap-up extending to 10x ATR% above the 50-MA on the immediate post earnings session. Lessons learned have shown that it’s far more rewarding to wait for a post-earnings continuation base setup, which offers a better risk-reward entry even when fueled by a strong earnings beat catalyst (a \"stock in play\" as PradeepBonde describes). For every 1 of such play that worked (eg.  <a data-mention-id=\"RDDT\" class=\"teditor-mention\" data-mention-name=\"Reddit\" href=\"https://ttm.financial/S/RDDT\">$Reddit(RDDT)$</a> ), there will be another 9 that undercut low to stop loss before it reset as a swing setup with flag/pennant consolidation pattern. </p><p>Extended earnings gaps of such play require careful evaluation of the trade's risk-reward proposition. The consideration of trading these setups involves chasing an already-expanded intraday range beyond ATR, which can dilute position sizing, reduce potential risk-reward, widen slippage, and ultimately diminish profitability, even if the trade works. This quarter earnings I only have  <a data-mention-id=\"GRAB\" class=\"teditor-mention\" data-mention-name=\"Grab Holdings\" href=\"https://ttm.financial/S/GRAB\">$Grab Holdings(GRAB)$</a>  and  <a data-mention-id=\"LRN\" class=\"teditor-mention\" data-mention-name=\"Stride\" href=\"https://ttm.financial/S/LRN\">$Stride(LRN)$</a>  as SIP post earnings play because they are the only one that qualify the fundamental beat and at the right technical spot to execute an entry and tightened risk. You can’t trade them like a slot machine—it offers zero edge.</p><p>Give good fundamentals companies the required digestion post earning's gap at extended level before it go again.</p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/426ae1c6c2596645139e739a81bea1f7\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/561f20b7e30e6b947c88d8873a831d14\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/6e8b5eeb777b2b58694cb37207903ddf\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p><p class=\"t-img-caption\"><img alt=\"Image\" title=\"Image\" src=\"https://community-static.tradeup.com/news/e0d678210b15bc497fe8ed8abd20f1f9\" tg-width=\"1280\" tg-height=\"962\"><span>Image</span></p></body></html>","text":"Earnings Gap-Up Failure with an Immediate 10x ATR% Extension from the 50-MA (eg. $Credo Technology Group Holding Ltd(CRDO)$ $Dutch Bros Inc.(BROS)$ $United Natural(UNFI)$ $Carvana Co.(CVNA)$) I’ve strongly advocated against trading into a strong gap-up extending to 10x ATR% above the 50-MA on the immediate post earnings session. Lessons learned have shown that it’s far more rewarding to wait for a post-earnings continuation base setup, which offers a better risk-reward entry even when fueled by a strong earnings beat catalyst (a \"stock in play\" as PradeepBonde describes). For every 1 of such play that worked (eg. $Reddit(RDDT)$ ), there will be another 9 that undercut low to stop loss before it reset as a swing setup with flag/pennant consolidation pattern. Extended earnings gaps of such play require careful evaluation of the trade's risk-reward proposition. The consideration of trading these setups involves chasing an already-expanded intraday range beyond ATR, which can dilute position sizing, reduce potential risk-reward, widen slippage, and ultimately diminish profitability, even if the trade works. This quarter earnings I only have $Grab Holdings(GRAB)$ and $Stride(LRN)$ as SIP post earnings play because they are the only one that qualify the fundamental beat and at the right technical spot to execute an entry and tightened risk. You can’t trade them like a slot machine—it offers zero edge. Give good fundamentals companies the required digestion post earning's gap at extended level before it go again. 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