A ‘Monster’ Capitulation Daytrade

Michelle B submits:

On Tuesday, April 24, approaching 2 PM, the time of the day that I regard as the Period Of Treachery—fondly referred to as POT—I noted MNST screaming red on the low ticker. I checked to see if there was news to explain the decline, and there was none. I quickly called up an one-minute chart of MNST and noted the two measured down legs.

Then I determined possible support via the thirty-minute and daily charts at around 43.40.

Price never touched the gap support on the daily (see below), but I let the fact that MNST did two measured down legs into intraday thirty-minute price level and 200 sma support to take preference. In addition, daily volume was set to be moderate and not the kind of high volume that would have been needed to fill in that daily gap so I was more inclined to trust what I was seeing via the two measured down legs.

I pegged resistance via the five-minute chart at around 43.87.

Guided by the one-minute chart (see below), I entered at 43.43, during a pullback following the capitulation bottom.

In summary, entry was at 43.43, exit at 43.83, and stop loss at 43.33 just under the intraday lows, resulting in a 4R trade lasting about thirty minutes. Once the resistance was hit, traders—like me—offered shares at the bid and not at the ask, causing a small downdraft. MNST can trade quite rough, and it is one of those stocks that I will trade only if I have mapped out everything before hand! This particular trade contained all the points listed in the capitulation checklist.