By Barrie Einarson, Trade Ideas

Hello everyone, Barrie Einarson here from Trade Ideas with today’s edition of What Makes This Trade Great — and let me tell you, this one wasn’t easy, but it sure was exciting to watch. To Subscribe to Trade Ideas: https://go.trade-ideas.com/SHQ
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The Setup

The ticker was VEEE, and it first popped up on our radar in the pre-market. The catalyst? News of a merger with another company. As you’d expect, the stock was really active before the open — lots of volume, lots of attention.

Then came the pullback. And here’s where it gets interesting: the stock pulled back right into the VWAP.

Why the VWAP Mattered

We talked about this one quite a bit in our trading room. If you’ve followed me for any length of time, you know how much weight I put on the VWAP as a key level. And VEEE gave us a textbook example of why.

The VWAP held that stock for about 25 minutes. Test after test — one, two, three, four, five times — buyers stepped in and defended that level before the stock pulled back at all. That kind of repeated hold at the VWAP tells you something: there’s real demand sitting there.

The Move

And what a move it was. From that VWAP hold around $10.76, VEEE ran all the way up to almost $19 — nearly a double. It pulled back a little, caught its breath, and then made another huge leg up to $29.

That’s the kind of follow-through you dream about when you see a clean VWAP hold with a real catalyst behind it.

What I’m Watching Now

I’m keeping an eye on this one for later in the day. In theory, if volume comes back into the name and it can take out $25, there’s nothing stopping it from going on another run.

A Word of Caution

Now, here’s the part you can’t ignore: this thing has only about 520,000 shares in the float. That is a crazy low float. Low-float stocks can double in an hour — and they can give it all back just as fast. You’ve got to be awfully careful trading names like this. Position sizing and discipline matter more than ever.

But careful or not, this was certainly one exciting stock to watch — and a great lesson in respecting the VWAP.

Trade smart, everyone. See you in the trading room.

— Barrie