great PEG (power earnings gap) play setting up on Draft Kings. I’m really just looking this to flag and consolidate in this range for this week and ideally scale into 35s risking a close below 34.
First target is $40 before adding a scaling stop.
It looks a lot like $PLTR for example here:
Here is a chapter from my swing trading book I think maybe relevant here. It’s combing the power earnings gap setup with the “holy grail setup”
The Holy Grail Setup
This technique capitalizes on strongly trending stocks that pullback and hold support at the 20-day moving average (MA). After consolidating at the 20-day MA, the stock often bounces and resumes its uptrend. 28 The setup was first popularized by Linda Raschke and centers on buying dips in uptrends.
Here is how I trade it:
- Find stocks in strong uptrends that are overextended short-term
- Wait for a “smart pullback” to the 20-day EMA
- This is ideally the first or second test of the 20-day after a powerful earnings gap
- The pullback should be steady, low volume, and take place over multiple days
How to Trade It
- Identify extended stocks and mark the 20-day EMA on the chart
- Wait patiently for a low volume pullback and test of 20-day EMA
- Enter long on the first sign of support and reversal at the 20-day
- Use a stop under recent swing lows, below the pullback
- Target a move back to recent highs as minimum upside target
- Manage the trade with a trailing stop under 20-day EMA
In summary, this high probability setup capitalizes on orderly, low volume pullbacks in strong uptrends by buying the first dip to the 20-day MA. This 29 allows getting long at an ideal entry point with defined risk and upside targets.
The pattern looks like this:
The setup calls for a buying on the first or second test of the 20-day moving avg. in an strong uptrend. Ideally the uptrend started from a huge earnings or great news catalyst.