Trade Opportunity Case Study of the Week: HIMS Range Breakout – | Feb 1, 2025

The Trade Opportunity

The purpose of this weekly article is to analyze the top trading opportunity of the week. To improve our identification and execution of high quality trade ideas that meet our setup requirements.

Each article will focus on a stock that meets one of three of the main categories of setups I trade:

• Range Breakout / VCP / tight area breakout
• Pullback to Support/ Key moving average
• Gapper / Post Gap Setup

These articles are like taking a step into the batting cage and loading up a historical at bat from a Ace pitcher in the world series – they will help you prepare and execute in future situations by studying important moments from the past.

The setups we cover will appear again and again in each market cycle

So far we have covered examples of trade setups & entry tactics after a recent gap:
Previous article covering the BE Day 1 Gapper Setup
Previous article covering the AI Day 3 Gapper Setup
Previous article covering the DOCS Post Gap Range Breakout Setup
Previous article covering the ALAB Range Breakout Setup
Previous article covering the NVCR Range Breakout Setup
Previous Article on QMCO Range Breakouts
Previous Article on CRNC Episodic Pivot
Previous Article on VST 10 EMA Pullback

The Market was certainly choppy this week on the gap down Monday but that did lead to some opportunities.

In addition to HIMS which we will cover in depth, here are some names worth reviewing:

RDDT Up around 15% from the open of the week and 10% from the base re-breakout

TEM push from the flag

DUOL Oops reversal and 21ema reclaim

SHOP oops reversal and gap and go

CAVA range breakout

RCL Earnings Day 1 move

The best opportunity however this week was entering HIMS which held the 10ema on the market gap down, set up a tight range, then broke out from the base

Daily Chart:

Discovery

To get HIMS on your radar you would want to be tracking names that were moving up the right sides of bases and forming tight areas.

HIMS had been on my radar for a while after it had a strong move with the Ozempic Theme. It had broken out to new all time highs before forming this next base.

I had mentioned it in the Jan 14 report

And also Jan 17 as it setup the first actionable spot and popped higher

Then most recently I feature it in the Jan 29 report as it setup again before it’s strong end to the week

I found it via my daily routine of going through the Deepvue Leaders list and looking for tight areas using RMV.

Setup and Execution

The first setup for HIMS last week was an Oops Reversal and 10ema pullback on the large Monday gap down

This would have been a great trade but a tough spot to get.

1. This would have required an offensive mindset after the gap down instead of defensive
2. This would have required a focus on HIMS right at the open off the 10 day or on the opening range breakout

Here is the upside reversal day action on a 5 minute

Likely given the nature of the day it was a sell as it broke below the Daily VWAP for the second time.

The Next Day we did rip, but then sold off before going tight the next few days.

5 Minute Chart:

Here is the Action on a 65 minute timeframe into the end of the week

Here is what HIMS looked like going into Thursday where it pushed 16% in 2 days. You can see hwo the inside day primed the tightening range

The pivot was the daily high and it immediately pushed through, this would have had to be on your daily focus list.
The stop could have been very tight at the low of the day which would be under 1%

Placing a 25% position which is about as much as you need in a HIMS would only be risking 0.25% of your total portfolio.

HIMS shook twice below the daily VWAP, but for the most part trended well. At the end of the day you would be up around 5% or about 5R.

The next day HIMS follow through more, and aggressive traders could have even added through the prior day high or just off the open with the low of the day as the stop.

This add would have been up around 8.5% at the close and the orginal entry nearly 16%.

On a daily chart we can see now that HIMS broke out of the first base since breaking out all time highs with clear skies ahead

Here it is on a weekly chart. It looks like it comes quite far and it has, but often a breakout to all time highs is just the beginning of a move.

Future thoughts

HIMS is a whippy trader and a bit short term extended here. The entry we discussed gives a trader enough cushion to let it work without testing their cost. At this point their stop should be at breakven or even slightly above, and they could have sold some on Friday’s move to lock some profits.

Ideally it follow throughs but forming a higher low above the 10ema and reconfirming higher would be preferred, and then just trending above the rising 21ema.

Once the 21ema is above the traders cost, they can use that to trail their stop loss. The strongest stocks in a good uptrend can go hundreds of percent without 2 closes below it.

If however next week HIMS reverses the breakout move and falls under the pivot, A trader should be a bit cautious but try to give it to the end of the week. With a good entry sitting is often the best policy.

HIMS is a more volatile name, so depending on the traders style they could should to adopt more of a swing trading mindset and use faster rules such as an extension above the 10ema or a negative downside reversal as a sell.