Lessons From LGVN

by | Nov 22, 2021

There are many great lessons to learn from the market’s most recent first green day spiker.

Large-cap stocks have been hogging most of the volatility lately. So it was really refreshing to watch Longeveron Inc. (NASDAQ: LGVN) run from $3–$8. That’s a price increase of over 100%.

While I watched the stock, I noticed a lot of great lessons to learn. Take out your notebook — this letter is full of essential day-trading knowledge.

Also, I answer a great question I received last week. Read on for that and more… 

LVGN: Look at This Move!

On November 18, LGVN gapped up on news and made a colossal run for highs of $8.

I liked the news, but the stock didn’t fit my pattern in the morning, so I didn’t trade it.

LGVN chart 1-day, 1-minute candles (Source: StocksToTrade.com)

Usually, on stocks like this, I’m looking for a bit of a fail at the open. Then I buy at the lows and wait for it to change direction.

It’s called a gap and crap reversal pattern. One of my favorites. I break it down in this video:

The price sort of dipped right before the open. Then it was ready to run by 9:30 a.m. Eastern.

I don’t usually buy premarket, so I missed that dip. And after it spiked, I was nervous to chase it.

Yeah, the catalyst is pretty good. But we saw the crazy volume and volatility because day traders were going nuts. This was pretty much the only hot stock that day, so people were hitting it hard.

I’m sure a bunch of shorts got blown up along the way too. Take a look at all the lessons we can learn from this stock already… 

  • Play stocks with catalysts
  • Focus on your patterns
  • Look for high volume
  • Don’t chase

Now we can get into potential plays.

Where to Buy

This is a great time to address a question from last week about how to use support and resistance for setting entries. Check your inbox if you missed that issue.

This question fits in perfectly with the lessons we can learn from LGVN.

And a big thanks to Madeline for her question. She asks:

“By drawing the lines on a chart you can see areas that the stock may be trapped in. My question is how do you use the lines to determine entry and exit points?”

The lines she’s referencing are the support and resistance lines I covered last Wednesday. Hopefully, I can clear some things up using the LGVN chart.

And that’s a great description of the lines. They help traders see where the stock could get trapped. Take a look at the chart below.

Just a heads up, the chart is set on five-minute candles. It can be helpful to look at these charts from different perspectives to see patterns.

LGVN chart 1-day, 5-minute candles (Source: StocksToTrade.com)

First of all, let’s remember that this isn’t an exact science.

Support and resistance lines aren’t foolproof. But in this case, they work beautifully.

Like I said last week, traders tend to congregate around whole numbers, aka psychologically significant numbers.

You can see on the chart the breakout past $5 where it kissed it, dipped, then rocketed through.

The ultimate high of the day was $9, so that’s the breakout level for the afternoon.

Then the question is… 

What’s The Play?

In my opinion, the safest trade would be a buy on the third test of $6. See how that line acts as support throughout the whole day?

If the trade fails and it falls below $6, cut it. But in this case, it ran back up to test the highs again.

So, to answer Madeline’s question: Buy above a support line. Then you can sell just under a resistance line or hold to see if it breaks through. And always sell if it breaks your support line.

More lessons to take away:

  • Support and resistance lines matter for entries and exits
  • Look at charts over different time frames
  • It’s not an exact science
  • Buy above support
  • Cut losses quickly

Didn’t I say there would be a lot of lessons today?

Parting Thoughts

I’m really excited to respond to any questions you have. So make sure to pay attention to future issues of The Wolf’s Den. I want to get specific feedback from you. I’ll hit YOU up with specific topics soon.

It’s all part of the learning process. Questions are good. Keep ‘em coming.

Always ask yourself why,

Roland Wolf

Editor, The Wolf’s Den

About Roland

Originally from Arizona, Roland started trading after a career-ending ankle injury forced him to quit pro soccer. After a few years of hard work, he managed to turn $4,000 into over $1.2 million.

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