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We’ll cover the year’s clearest rotation signal from Big Tech earnings, why the market is refusing to break despite oil spikes and inflation scares, the explosion in small caps as rotation goes mainstream, which stocks Alex and I are buying and more [tap to join us for Profit Panel]
You’ve probably seen it happen…
A stock gaps down on ugly overnight news, yet by midmorning it’s climbing like nothing ever happened. That’s not random.
It’s a reaction to what Wall Street’s trading desks do while the rest of the world sleeps — they short the stock the moment bad news hits, then buy it back as the market opens. That unwinding can send shares higher fast once liquidity kicks in.
I wait for one thing: Confirmation at 9:40 a.m. ET. If buy orders start flooding in during those first 10 minutes, the move is real. That’s the window where these setups tend to fire.
This played out with MicroStrategy (MSTR) after its Bitcoin portfolio cratered. It sold off hard pre-market, but once the 9:40 a.m. signal triggered, MSTR pushed higher through the morning, handing traders up to 29% before lunch.
Walt Disney (DIS) did it after attendance slumped. Western Digital (WDC) did it after a rough downgrade. Even Bloom Energy (BE) ripped nearly 100% in just a few hours.
The Mechanics and The Limits
This pattern works because closing a short requires buying the stock back. When that buying hits all at once at the open, it creates pressure that can drive powerful reversals.
But not every gap-down qualifies. Jumping into any falling stock without confirmation is a fast way to get burned. You only want the setups showing clear signs of real forced covering or aggressive early buying.
Most of the time, you’re not aiming for a full recovery. Stocks that gap down on news often retrace roughly half the move — and that 50% zone is usually enough to capture the quick pops these trades are built for.
Once in the trade, I take profits in stages. I typically lock in 20% to 30% right away, then let part of the position run. Most days it’s the early profit that matters, though occasionally a runaway move delivers much more.
This approach works both directions. If a stock gaps up on hype and the morning signals show weakness instead of strength, the same pattern can unfold in reverse. A quick put can capture the downside just as cleanly, doubling the number of opportunities you can target.
These signals show up all year, but they hit hardest during earnings season. On some mornings I’ll see four or five quality setups. Between cycles the pace slows — but strong trades still appear.
To keep this structured, I treat it as a rules-based morning window, not a guessing game. You still need to respect context, liquidity and the chart before acting. The signal only matters if the market confirms it.
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Geof Smith
Geof Smith TradingÂ
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
P.S. Everyone Panics… Then This Happens Next in the Market
Most of the “buy and hold” investors out there are practically living life on the edge.
They keep their eyes glued to the news and jump in and out of any stock that shows up on the headlines.
However, when investors run for the hills and panic sell, that’s usually a green light for the kind of opportunities we pursue daily.Â
Take the recent dump of Applied Materials, for example, thanks to China tensions.
Or even Disney stock slumping on a falling theme park report.
These “red flags” create the perfect setup for a 10-Minute Moonshot once the initial panic subsides and institutional buying begins.
And if you know how to look…
You can plug into these 10-Minute Moonshots and target a double, even triple-digit payout the same day before lunch.
Now, we can’t make trading guarantees here…
But I’d like to show you how to spot stocks that are in line for massive institutional buying at the open…
As well as how to tap into those transactions every single day.
Interested?
Get Started With the Details Right Here
Disclaimer: We develop tools and strategies to the best of our ability but no one can guarantee the future. The profits and performance shown are not typical to any one individual and you may lose money. The trades shown are from historical data in order to demonstrate the potential of the system..Â
