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Fast Moves Come From False Moves

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UPWK is a dramatic example of how oftentimes breakouts can be the most dangerous point in a stock.

UPWK broke out of a multi-month beautiful looking Cup & Handle on Tuesday.

Hit and Run members took it long at 61.25 (by the time we were filled allowing for 2 minute execution as the stock was ramping).

In keeping with our Hit & Run/Trim & Trail philosophy, we sold half at 62.85 on Wednesday morning, placing a trailing stop at breakeven.

Stops are a good thing as fast moves come from false moves.

On Wednesday, UPWK triggered an Opening Range Breakout to the downside (ORB) on trade below the 1st half hour’s low.

It followed up with a Jump the Creek sell signal when it dropped back below Wednesday’s open gap.

The combo sell suggested a Buy ‘Em to Bang ‘Em play was in play.

In other words, that a big player orchestrated a breakout of a “beautiful” Cup & Handle knowing the Street would chase the breakout enabling them to sell into strength.

If you’re a big institution, you have to look to sell into strength.

Following sharp breakouts, many players are looking to buy the first pullback, looking for the prior strength to be revisited.

This works to the big Seller’s advantage as well.

However, when no bounce occurs, market participants realize a Trap Door has opened and they sell at any price.

In sum, when it looks like a Trap Door has opened, your first loss is your best loss.

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