Along with trading unusual options activity I trade ‘gap’ setups which are what my daily, weekly and monthly watch lists consist of. Gap setups that I look for are stocks that have not yet filled their gaps after two periods (daily/weekly/monthly). A gap on a chart creates a new trading range so it cuts out a lot of the noise when it comes to technical analysis. Here are some examples below with stocks from my watch lists….

Gaps provide clear support/resistance levels for the third period and as long as they open within those ranges the trend remains intact. Entries are at or near support/resistance levels with tight stops above/below those levels in the trend which provide for favorable risk/rewards. This strategy works on any time frame where there is a gap. Here is another example of a daily gap on BABA…

Notice how with BABA it didn’t get up to test daily resistance. In this case it would be a buy at daily support which it tested and held but there would be no trade at resistance since it never reached it. And if a trade is taken near either of those levels (support/resistance) there would be a tight stop below/above those levels.