If a stock looks to be in a strong uptrend and has begun to pullback,it may present a buying opportunity as stocks in strong uptrends often only pullback for a few days.

If you are watching a particular stock that rises 5 percent or more during the opening and you can locate no news about it, chances are that stock will retreat after about the first 30 minutes of trading. The market makers
may be trying to open the stock at an inflated price to sell off excess shares they bought the day before.

If this same stock does not fall in those 30 minutes, it has a good chance of rising the balance of the day. What's a good tactic for this? Buy 1/16 above the day's high after the opening and set a stop at 1/16 below the day's low.



One method some traders use is called "fading the market" whereby they buy into weakness and sell into strength. Here you buy a stock with a small percentage decline relative to the market, hoping it will gain when the market reverses. You do not buy until your stock trades above its opening price, you do this because previous buyers will sell to prevent loss which drives the price down in the short term.


Somebody wanted to know what a dead cat bounce is:
It's the theory that if you throw a dead cat down hard enough, it will bounce. Hence, if a stock gets slammed hard enough it will bounce for a quick play. The opposite play is called a "peak" play, meaning if a stock has moved up fast, it could be looking a pullback and hence it "could" be a good candidate for a short or a stock to buy put options on. In either case, you have to be quick.

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