What Makes and Breaks a First Green Day Setup

by | Jan 27, 2022 | Trading Lessons

Matt here.

I love the first green day (FGD) pattern. No big surprise given that I learned to trade from Tim Sykes. 

The FGD pattern can signal the potential for big gains over the course of a few days. That is if everything works out perfectly.

Of course, in a market like the one we’re in now, we don’t see as many cut-and-dry first green days…

Here’s an example. Earlier this week, I was eyeing Vinco Ventures, Inc. (NASDAQ: BBIG) as a potential first green day. Unfortunately, it didn’t work out exactly as I’d hoped…

So let’s break it down. Today, I’ll walk you through why I saw FGD potential in BBIG and what didn’t pan out so well.

Why I Saw First Green Day Potential in BBIG

When I made the BBIG FGD callout in Small Cap Rockets on Tuesday, it was for a few reasons…

This was a big runner a couple of weeks ago before it fell back. It ran from January 13–18, then sold off for three days.

After that, it signaled the sell-off might be over.

Check out the chart…

BBIG 1-month chart

Then, on January 25, BBIG ran 16% right out of the gate, sold off, and then had another run before consolidating the rest of the day.

BBIG 2-day chart

It ran up more in after-hours and premarket trading but plummeted on day two — January 26.

So, why exactly wasn’t this the perfect setup? Well, there was no crazy volume suggesting big momentum. And there was no news catalyst, either…

The tide turning in this stock showed me it had strong potential as a first green day runner. But the limited volume and lack of news made it tough for a multi-day run.

Why It Worked … But Not to Perfection

Anyone who was able to get in BBIG during that early run was surely happy. But expecting a  multi-day run — one of the most enticing features of the FGD pattern — would have led to disappointment.

BBIG ran in the morning. But to get conviction on a potential multi-day run, you’d like to see some strength in the afternoon. While it did hold VWAP, it mostly just chopped around.

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Also, with this being a higher-float stock, you’d need to see A LOT of volume come in and push the price higher.

It’s called the first green day because it’s the first of many green days. Well, traders hope so anyway…

This is the same pattern that led BBIG on its mid-January run … A big rumor brought in large volume and helped the stock run for a few days.

The rumor and volume weren’t there this time, turning a potential BBIG FGD into a single-day run for traders to scalp. It finished red yesterday.

Conclusion

Perfect setups are hard to find in general. They’re even harder to find in this market…

But BBIG is a good lesson of what a first green day can turn into — both with and without a catalyst.

With a catalyst — and volume — the chances of a multi-day run are much stronger. Without one, you may have to get scalpy.

As always, study all the price action to better prepare for future trading.

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