How to Make the Most of Pullbacks on Big Market Days By Trade Ideas
Hey traders, Barrie Einarson of Trade Ideas here with today’s breakdown of what made our recent trade great. We started the day with a massive gap-up across the board, with the Dow up over 1300 points, NASDAQ climbing by 420, and the SPY up by 11. Days like these can be tricky. Why? Because with everything surging, the risk of jumping in too high is real. That’s where the art of the pullback comes in.
Why Pullbacks Matter on High-Volatility Days
On a day when stocks are already up 20-30% right out of the gate, trying to chase can leave you exposed. Instead, I focus on finding pullback opportunities that align with technical markers, like the VWAP (Volume Weighted Average Price). These plays offer a chance to catch stocks on the dip, allowing for an entry closer to key support levels.
CXW – A Prime Example of a VWAP Pullback Play
Today’s trade of note was CXW. It was flagged by our AI alert system at $17.54, and I shared my thoughts in the main trading room. Initially, CXW gapped up but then started to pull back, presenting a setup that looked promising as a VWAP play. I watched the stock as it held around the VWAP (the red line on my chart), waiting for confirmation.
Eventually, CXW broke slightly below VWAP but then regained strength, a classic signal that buyers were stepping back in. Shortly after, our AI system confirmed the setup, marking the entry point. By the time it hit $18, we were looking at a solid 7.5% move.
The Takeaway
Days with big market gaps don’t have to be intimidating. By focusing on pullbacks and watching for VWAP support, you can enter trades with a better balance of risk and reward. VWAP acts like a “magnet” on days like these, so use it to your advantage to navigate the chop.
Artificial Intelligence Trading
