What Does Keyser Soze Have To Do With Killer Trades?

“The greatest trick the Devil ever pulled was convincing the world he didn’t exist.” – Charles Baudelaire

The greatest trick a stock can pull is to convince you its breakout is real.

Fast moves come from false moves because markets turn on a dime, while most traders cannot.

Think the SPX October breakout in 2007.

Think the SPX undercut in March 2009 of its November crash low.

As traders, we’re all transactional and looking for explosive gains quickly.

Consequently, back in the 1990s in my Hit & Run Trading Books, I created a strategy called Keyser Soze, named after the mercurial and vicious character in the movie The Usual Suspects, memorable for its false twists and turns.

Let’s see how hot IPO AI plays into this Keyser Soze price action.

A daily AI below shows it Pinocchioed its 50 day line on Friday.

It gapped up above its 50 day and reversed to close below it on the weekly basis.

The first time a stock hits its 50 day moving average following a persistent downtrend, the normal expectation is for at least a pullback if not new lows.

However, AI exploded from the bell to kick off June and never looked back on Monday.

Fast moves come from false moves.

AI reclaimed its 50 day with authority after a headfake on Friday.

The above 10 minute shows the big Trend Day following an Opening Range Breakout (ORB).

In Tuesday night’s Hit & Run Stock Report we used AI as a long setup on a pullback to 70.70.

Stocks often show Bleed Back into a prior day’s range — especially after a large range day.

AI pulled back from the bell on Wednesday and we got filled.

We trimmed, taking partial gains at 73.50 and sold the balance into the close, locking in a more than 5 point gain on the balance of our shares, knowing that AI was due to report after the close.

This morning AI is testing support at the 67.50 region and we are reloading a pilot long position.

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