Yesterday it could've even spike at the open. It just completely fell apart.
By avoiding stocks with a history of one-and-done moves, you can reduce the risk of getting caught in fading trades.
Another way to avoid fading stocks is to…
Avoid Stocks That Aren't in a Hot Sector
Hot sectors are where the majority of traders focus because they can offer the most volatile price movements.
AI stocks like NVIDIA Corporation (NASDAQ: NVDA) and C3.ai, Inc. (NYSE: AI) arebreaking out to new highs, so those are the stocks traders are focused on.
When a stock isn't in a hot sector, it lacks the momentum and interest that can drive prices higher…
That means it's more likely to fade — just like ACON did yesterday.
The fact that the stock isn't in the artificial intelligence sector is another reason I didn't like it yesterday.
And ACON collapsed at the open. This leads me to the next sign of a fading stock…
The Volume Weighted Average Price (VWAP) is a popular indicator used by traders to gauge the average price a stock has traded at throughout the day, considering both volume and price.
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