Trade Opportunity Case Study of the Week: TEM Opening Range Breakout – | Feb 8, 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
Previous Article on HIMS Range Breakout

The Market continues to chop with another sharp gap down this past monday. However, gap downs create opportunities in strong leading stocks if they can stabilize and rally. This is because if the market lifts after the gap down, the strongest names will naturally be boosted, creating a cushion to hold at the end of the day.

We will discuss this type of opportunity with TEM in today’s article.

In addition to TEM, here are some names worth reviewing form the past week

AFRM Gap reversal and earnings gap

DOCS Earnings Gap

PLTR post gap range breakout

MGNI reversal and range breakout, and base breakout

HIMS reversal from the base pivot retest

SOUN Oops Reversal

ROOT Oops Reversal

RDDT Oops Reversal

The best opportunity this week though was TEM off the open on the gap down. It had shown strong RS among AI names the past weeks and from the opening range breakout monday rose 25%

Discovery

To get TEM on your radar you would need to be tracking leading stocks in leading themes. TEM was also featured in the weekends report before the opportunity discussed today.

Last monday when almost every AI related name was down significantly due to Deepseek, TEM closed positive and finished the week strongly, showing RS. This would lead to it being on your watchlist waiting for an opportunity.

It was also the #2 stock ranked by 1 month Absolute Strength on the Deepvue Leaders Screen last weekend. This is my go to screen and is a Deepvue preset.

Setup and Execution

The setup for TEM was a pullback to the confluence of the 10ema and piror RMV Pivot. An RMV pivot is the high of the range set when RMV becomes low and approaches 0. It did so on the inside day the prior week. Former RMV pivots often act as support.

The Entry tactic for this trad was a 5 minute opening range breakout

To execute this trade you would have to have TEM on your daily focus list.

Here is Day’s action on a 5 minute chart

There are 2 good potential entries here, first on the opening range breakout, and second on the push off the day’s VWAP

The Opening range breakout had a risk of about 2% using a stop at the low of the bar.
The VWAP pullback/outside bar had a risk of about 1.5% entering through the inside bar high and stop at the low of the bar

Both would immediately have been profitable, the best sign for an entry.

The ORB entry would have had a profit cushion of about 11% by the close.
The Outside Bar entry would have had a profit of about 9% by the close

Both of these would have been sufficient to hold through to the next day and even take a partial off to de-risk.

Into the end of the week TEM acted very well.

It gapped the next day before tightening, reconfirming and then ending the week tight.

Here is a 65 minute chart

Here is a daily chart:

Here it is on a weekly chart. I like the look of the base it has been building after it’s IPO and the volume profile shows skyscrapers of accumulation and increasing average volume.

The resistance above will be key, ideally it tightens and sets up for a few weeks before attempting the breakout

Future thoughts

TEM already announced preliminary results including strong revenue growth

If TEM is to become a true market leader it will present many low risk areas on breakouts and pullbacks along the way and the breakout throught he resistance above will just be the start of the trend.

It ended the week well with a short term tight area. However this tight area is not near a moving average or other key level so in my view is not directly actionable until a bit more of a pause. This is a fast mover however so a stubby range could work.