Page 369 - THE MARKET WHISPERER

THE MARKET WHISPERER 36 5
Macy’s (M) on the Day it Announced Profit

On May 12, 2010, following an excellent quarterly report, the retail giant
Macy’s opened with an up gap of 2.2% [1]. In addition, a positive review
was also publicized relating to Macy’s growth in sales. Immediately after
the trading day opened, Macy’s dropped sharply and closed the gap [2].
As we have seen, the gap-closing point is very often also the point where
direction changes, which was true in this instance. Macy’s recovered and
closed at the highs [3]. What would have happened if, following publication
of these positive reports, you would have bought the stock at the opening
of trade [1] in the hope that it would continue rising? Most likely, with a
drop of more than 2% towards the gap-closing point, you would have found
yourself with a loss. The conclusion is that a stock’s behavior following
publication of financial information is erratic and cannot be anticipated.
Everything is possible, and anything can happen. If the stock moves up, it
can be bought long if it also shows a satisfactory technical formation, and
backed up by a reasonable stop order.

Question: Can you identify a good technical intraday entry point for a
long? I see the “inverted head and shoulders” formation at $24.40. Can you
also see it?