Today I want to talk about a set-up that we look for often in the T3Live Momentum Mentoring Room: the 5-minute high-low trade. 3-D Systems (NYSE:DDD) was a perfect example of this set-up this morning. For this set-up, you, naturally, watch the first 5-minute bar. If the stock takes out the high or the low of this bar, use 50% of that opening bar as your stop. In this case, the 5-minute high was $58.75. The stock took out this high, saw a small pull-back but did not test the low, then we had a good $2+ move. If you sold when the stock started to put in a red bar, you had a solid trade of $2 based on this method.
We saw the same type of thing in Herbalife (NYSE:HLF). It took this stock about 30 minutes to get above the opening 5-minute high of $32.45. But as soon as it got through that, it never violated your stop at 50% of the first 5-minute bar. The stock has been holding above that 5-minute high and continued to go higher on a denial from the company that a regulatory probe has been initiated.
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*Disclosures: Steve Levay is long calls in SPWR and CLSN.