Breaking Down a Successful Weekend Trade

Let’s speak about my current weekend commerce.

What turns a chart that appears like THIS…

Supply: Shares To Commerce

Thriller ticker, 6-month, each day candle, weekend commerce candidate.

Right into a inventory that I’d need to commerce (ESPECIALLY earlier than these inexperienced candles the final two days)?

Speak about crushed down, proper?

Not solely did I commerce it, I held it over an extended weekend.

And it performed out virtually precisely like I assumed it could.

Why Commerce a Overwhelmed-Down AI Inventory?

On Thursday (July 2), Yiren Digital Ltd. (YRD) introduced its board of administrators had licensed a share repurchase program for as much as $20 million over the subsequent 12 months.

Supply: Yiren Digital Ltd. by way of PR Newswire

Now, why does a share repurchase matter?

On a purely technical stage, first, there was an preliminary spike on the information.

YRD light into the open, however there was a pleasant breakout over the premarket highs within the early afternoon, the place it set a brand new excessive of the day.

Supply: Shares To Commerce

YRD, 7/2/26 to 7/6/26, 1-min candle, premarket highs turned morning resistance.

As you may see, the premarket highs turned the morning resistance. After the breakout, the $1.30s turned assist.

So, my query was…

Can It Have a Second Leg?

I appreciated that YRD was holding proper close to the morning spike highs.

Keep in mind, former resistance turns into assist. So, theoretically, it wasn’t more likely to dip under the $1.30s.

However what if I used to be flawed?

I might have adopted rule #1: lower losses shortly. On the lowest. I might need lower within the $1.20s if it dipped too shortly.

Lengthy story brief, I appreciated the chance vs. reward.

Once I purchased at $1.37, I used to be risking roughly $0.10 per share.

If I used to be proper and there was one other leg up, I figured it might retest the excessive of the day at $1.55.

Supply: Shares To Commerce

YRD, 7/2/26 to 7/6/26, 1-min candle, weekend commerce with catalyst.

I didn’t suppose the inventory might get again to the place it was buying and selling in March (the $3s), however I did suppose there was 10%-20% of upside over the weekend.

YRD had a pleasant little spike on the open. I made a decision to lock within the single as a result of it wasn’t taking out final week’s excessive.

Let’s dig somewhat deeper into the catalyst, as a result of once more, a couple of months in the past, YRD was within the $3s.

Then, this occurred…

Supply: Shares To Commerce

YRD, 6-month, each day candle.

Once you see value motion like that, it’s essential to…

Perceive What Causes Spikes and Dips

YRD dropped 44% in someday as a result of the corporate had weak This autumn outcomes and suspended its dividend.

The article went on to say the dividend suspension:

“instantly challenges the sooner income-and-growth narrative and brings stability sheet resilience and credit score threat administration to the forefront. Brief-term catalysts now hinge much less on headline development and extra on proof that credit score prices are beneath management […].”

Quick ahead a couple of months and there’s a clear momentum shift.

Earlier than it suspended the dividend, the corporate was making an attempt to preserve money.

Now, the corporate is spending money to purchase again its personal shares.

Why is the corporate repurchasing shares if it’s so fearful about money or chapter (which is what the market was pricing)?

That tells me (and anybody paying consideration) that they’ve sufficient money to climate the storm.

And THAT means the inventory might have a multi-day runup.

Discovering Momentum in Friday-Monday Trades

On a commerce like YRD, it doesn’t matter whether or not I make $0.10 to $0.20 a share…

Get a full transfer as much as the $2s … or lose $0.10 to $0.15 a share.

An important factor is to know why the inventory was transferring and set a sensible threat stage and objectives.

Due to the share repurchase program, and figuring out why the inventory dropped when the corporate didn’t have sufficient money…

That advised me that there was a transparent momentum shift.

Ultimately, it turned out to be a single.

That mentioned, it closed on July 6, proper on the value the place I offered, so there could also be one other leg.

For extra weekend commerce concepts, take a look at my presentation right here … earlier than the market closes at present and also you miss the subsequent alternative.

Cheers,

Tim Sykes
Editor, Tim Sykes Every day