What a day for NSS! It gapped up at the open and sold off with conviction. The stock closed down on the day by 7.4% but, it closed down 10.7% from the open.
NSS reported record earnings and the profit taking ensued. Professional traders sell on news like that when the stock has been in a steady uptrend as NSS has been.
There may be a short term buying opportunity here although I won't be able to play it. I've got to be back in court in the morning but, for those who want to play it, there are a few buy set up scenarios.
The first is to buy any weakness in the morning that takes price down to the rising 20 day moving average. This is where you would reasonably expect an uptrending stock to reverse on corrections.
The second set up is to buy NSS if it can gap up at the open. Maybe wait 5 minutes if it gaps and then buy just above the 5 minute high.
If price movement is stagnant in the first 5 minutes, then wait 30 minutes and if price is above the open after 30 minutes, place an entry target just above the 30 minute high.
If the price moves down to the 20 day moving average and you don't feel comfortable buying at that point, wait and see if price can come back above today's close. If price moves down and comes back up to the close, it's a bullish sign.
What makes all of these trades low risk set ups is the rising 20 day moving average. You can minimize losses by selling if price drops below the 20 dma.
It will take a little patience to wait for the set up but if you know which one you like, and you can see it coming in advance, it provides a good low risk, high probability trade.
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