EarningsBeats.com Digest for November 24, 2021
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Will This False Breakdown Trigger A Bullish Response?
The best way for a market maker to gather shares is during an intraday breakdown. Why? Because if traders see a break below key support, they are much more likely to get stopped out. After all, when you set a stop, you're normally doing it beneath what you believe is a key support level. So it stands to reason that if a stock is
breaking down intraday, a failure to sustain that selling into the close is most likely due to market makers buying. Retail traders would be selling a breakdown, not buying it. Given this, check out Cerus Corp (CERS), which appeared to be losing both its 20-day EMA and gap support levels on Tuesday:
CERS is an extremely volatile $1.23 billion biotech company, so it's definitely not a trade for everyone. Only those willing to accept high risk should consider the stock. But I believe the odds are greater that CERS will recover from this false breakdown after its nearly 2.5% reversal off its intraday low of 6.95. The top of gap support from earnings is 7.00, so any close beneath that level increases the probability of the bottom of gap
support being tested, which is much lower at 6.69.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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