Peak Plays

Peak plays are very short term in nature and you should be prepared to get in and out very quickly. There are several reasons for Peak plays, some of which are: rumors, reports or earnings forecasts, mergers, upgrades, merger speculation, stock splits and sometimes they occur for no discernible reason.

There are basically two ways to play a peak: a pullback and the peak itself.

Peak Plays 

If there is still a lot of pressure built up and you're quick, you can participate in the run. If you feel that the peak will keep for a quick play, get in at the open. If you can place your order for opening more of a risk taker, or if you are more conservative, then wait for the first 30 minutes of trading to check the move. Often a stock that has a peak that continues for a second day, you experience a small pullback at the open and then turn and go up. A stategy is to qualify for the open offer price at the closing price of the previous day a limit order.

Since this is the second day of the peak, and you want to come out on the same day (perhaps even within an hour). More than likely the stock up and pull back very soon. Always know your exit before you buy (Wade Cook) and once your purchase order is filled, immediately place a limit order to sell (this may be a little as 1/4 to 1/8 of a point). The biggest game on a peak occurs with the pullback, so if you are going to ride to the top, you have to do it fast, this is not the time to get greedy And remember if you can not afford the stock, look to see if it has call options, probably at least two months out.

The pullback Play 

This is a simple game and one that is most used because the time is longer. A general rule for the largest peaks is: the faster and larger the run, the faster and larger the pullback.

On some peaks will be a session or two before the pullback begins. The big question here is "when will the peak hit its peak or will it top out"? Sometimes the peak is just a flick of a file that turns into a rocket. Generally, when we see a pullback, it will be slower than the run happened. One way to determine whether the stock is to achieve a top is to observe the volume. Look for a return to more normal trading with little or no upward price movement. And please do not get greedy you are not always going to hit the top of the peak, if you're trying to do, you risk not getting in on a quick pullback, you should be able to participate.

Sometimes it is the pull-back will occur in the morning of the peak, but more frequently we see further on, for a part of the next morning. As you can see, the stock wait until it hits a resistance point and then open a short position (put options do not forget). What if you can not see the stock? Simply, enter a limit order for your short position a little below where it is currently trading be affected. This way you avoid an open position until the stock has been permanently moved to the pullback.

You should not expect the pullback to return more than half of the peak give, because this does not happen often, especially if the stock is trending up over a longer period. To ensure a solid return in a shorter time not looking for more than a 25% pullback of the original peak. By following this guideline, you are going to worsen in another game your money.

What if you feel that there is a larger, more gradual pullback come? Look beyond the openings very closely, if you have the stock opening above the previous days close, you have to pay to buy the cover. Serious attention

Here are a few pointers to get you. More of an advantage Look at the graph on the night of the peak. Look to see if the stock hit a price significantly higher than the closing price, as it did, this could be an early sign of a pullback are. The second thing you should look at is a one year chart of your stock. Try to determine if it is stuck in a range in the last month or two, if it does, look to see how many other times it had been. Level this support / resistance in the past year If it has previously visited this area several times and also shows the first character in the beginning of this section, you get a great indication of a pullback!

Get in and get out quickly! 

And keep in mind that on a pure peak gives you is a shorter period of time (usually a day playing a) have the opening of the next morning is very critical and you can get. Not greedy

For the pullback game you are looking for a period of two days to a month, keep an eye open for a return to more normal volume and price plateauing (these are topping signs) and not looking for more than a 50% pullback of the original peak (be happy with 25% or less).