What makes a stock explode?

When I first started trading, I would look at the end of the day and see a huge 20%, 30% + mover and think how did that happen?  Why did the stock I traded move 1% and I was only able to scalp for say 30 cents.   What in the world was I missing?  Was it just the luck of the draw or was there something more.

To sum up what my thinking was during my begninng times of trading, I wanted to simplify everything.  So I solely focused on intraday patterns.  Which as I have learned might be the biggest mistake you can make.  What I always stress to other traders that I talk to is that you need a chart with the most room to move.  Traders should know stocks move from support to support and resistance to resistance etc.

How do you find the stocks that have the room to move?  Well, what I do is look at the daily chart, then the 30 minute chart to find the important areas of resistance.  Then I look for an intraday pattern to get into a stock.

Lets take a look at UVXY.  A 30% mover from today.

This was the Daily chart entering today.  what do we see over the line that is drawn.  We have a pretty big area of open space.  Lets look a bit closer at the 30 minute chart.

Again we can see quite an open space over the $12 area.  Each line I drew represented some form of resistance that it "could" have been rejected at.

On an intraday chart you can see it was pretty much a perfect trender all day.  It gapped up over the key 12 dollar area, consolidated for the first 2 hours of the day and ran to $14.  During lunch time it flagged and continued to build on top of support.  From then on, every flag or dip was buyable.  And the reason for this?  It had the room to move and was trending.  When I use the word trending that means a stock breaks a resistance, flags and holds its break out area.  This is the art of trend trading.  Dips and pullbacks get bought and you have awesome risk/reward.

Next time you are wondering why the stock you traded barley moved and you were only able to scalp for 25-30 cents, zoom out.  I'm willing to bet the stock had overhead resistance and did not have the room to trend.