XPENG INC (XPEV).
I doubt you or anyone you know has ever heard of this stock.
But it hit the scanner, and yesterday, one of our chat members pointed it out to me.
Problem is, we were too late.
Look what it did …
If it’s not already clear, the stock plummeted at the opening bell, jumped back to the VWAP, consolidated, and then broke out.
But when it hit my radar it had already shot up.
I wasn’t going to jump into the stock for fear of missing out.
For every stocks you need to keep to the fundamentals and look at the movement of the stock.
What it’s done.
What you missed.
Where it’s going to go.
And what the proper setup could be.
In this case, I was looking for it to go back to the VWAP (blue line), away from the multi-day VWAP (orange line).
You want the stock to consolidate sideways at the VWAP, reduce your risk, and buy in.
Because likely if it bounced higher earlier, and then comes back down to consolidate, that’s when it could scream higher in the next couple hours.
It doesn’t mean that it will.
It never does.
But the odds are in your favor when you use the VWAP to guide your trading.
Because nothing in the market is real. It’s all algorithms buying and selling at known previous highs and lows.
If you bought XPEV when it hit my radar yesterday, chances are you would have either gotten stopped out for a loss, or would have only made a little bit of profit it you timed it perfectly upwards.
Later in the day the stock plummeted to the VWAP, tested the resistance at that key level for 15 minutes…
And then fell over and died.
Trading is boring, and patience needs to be exercised at all times.
Don’t buy something because someone just said it broke out.
If you want to identify trade setups like this, I have a quick guide for you to understand how to trade around the VWAP.
Kenny “The Warlock” Glick
August 24 2022