Trade Opportunity Case Study of the Week: TEM Range Breakout – | Feb 17, 2025

The Trade Opportunity

The purpose of this weekly article is to analyze the top trading opportunity of the past week. This is 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 these case studies:
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
Previous Article on TEM Opening Range Breakout

I also have the following Educational Articles which expand more on Setups/Entry Tactics.
Oops Reversal Entry Tactic

Please let me know in the comments what other topics you would like me to write about

Last week we seem to have finally broken through a key level in this choppy market base that started in the middle of December. Wednesday we gapped down after the CPI numbers came out but rebounded strongly. This day off the open and then on the follow through presented the best opportunities.

Here are stock moves worth reviewing from this past week:

GRAL Range Breakout.

SWTX Base Breakout

APP Day 2 Move

PZZA Range Breakout

DKNG Range Breakout and Day 1 Move

INOD Oops Reversal and Range Breakout

UPST Day 1,2 Move

ROOT Breakout

CFLT Day 1/Base Breakout

DAVE Oops Reversal/10EMA Pullback

DUOL Oops Reversal

However, TEM again I believe was the best opportunity of the week. Up 24% in 3 days from the range re-breakout

Discovery

To get TEM on your radar you would need to be tracking leading stocks in leading themes. TEM has also been featured at key points In the Trade Lab reports since the recent gap up,

TEM, an application of AI, has been extremely strong. Leading you to need to be watching for entry points up the right side of the base.

TEM has also remained in the top 5 ranked stocks on the Deepvue Leaders screen the past few weeks. This is my go to screen and is a Deepvue preset.

On Feb 8 before this week, it was #3. Just behind $GRAL which also was a top mover this week gaining 60% in 3 days from a range breakout.

The best momentum movers and CANSLIM Market Leaders show up on this screen before and during their biggest moves. If I could only run 1 screen this would be it.

Feb 8 results:

Setup and Execution

The setup for TEM was a re-breakout of the range it was forming just below all time highs.

On Feb 11 it broke out from the range. This was actionable but it faded hard closing right near the pivot. If you had tried the pivot breakout you either would have been stopped at a profit, took it off at the close, or if you entered early in the session you could hold through to the next day looking for a re-breakout.

On a hard fade like that I personally typically take the stock off and look to enter the next day if it pushes again. Hard fades can proceed breakdowns from the range. However with a name like TEM you want to be willing to try it multiple times because of its high potential.

Here were my thoughts on Feb 11 after the close, the day before the re-breakout entry that we will be focusing on. I also noted it was one of 2 stocks on my daily focus list for the next day

Feb 11 Report: https://traderlion.com/profile/richard-moglen/chop-ahead-of-cpi/

The next day we did gap down, saw immediate strength off the open, fade at the daily pivot, reversal back up, before retesting the daily range pivot again and then rallying chopping into the close, closing near highs of the day.

Daily Chart:

5 minute chart. Look at the unlabeled chart below and identify entries where you could manage risk. You can compare it to the marked up chart that will be the next graphic.

Here are the potential entries in my view:

Entry 1 At the open – Managing risk at the LOD ~1% position risk. Either works or does not.

Entry 2: Through the breakout of the range pivot. Managing risk at the LOD would be about 5% risk. not terrible but not great Alternate stop that would be tighter would be the low of the intraday range set near the close the day before. This would be ~3% risk but you would have gotten stopped out.

From this entry TEM faded hard fast and undercut the daily VWAP.

Entry 3 Would have been on the intraday reversal on a break of the short term downward trendline and also a reclaim of the prior day intraday range. This is my view was the best risk/reward entry.

Risk would be managed at the intraday swing low (around 2% risk) the bar before or the low of the day (around 3% risk)

The stock immediately pushed from this entry giving you confidence and allowing you to move up your stop to break even quickly

Entry 4 was on the same bar just a bit higher on the daily VWAP reclaim. Risk managed on the intraday swing low (around 2.5% risk)

Entry 5 would be on a re-breakout of the daily range pivot. Again a stop to the low of the day would be about 5%, a bit wide. To the intraday swing low would be ~4%, a bit better.

From this entry the stock pushed but then faded a bit but did retest and undercut your cost a bit.

Entry 6 would be on a reclaim of the daily VWAP and daily range pivot after this fade. You could manage risk at this new swing low pretty tightly at around 1.5%

From here the stock rallied then mostly based into the end of the day but did give you about 3% cushion EOD.

Examine the chart below again for the labeled entries

All of these entries would have given you solid cushion into the end of the day, enough to give it a shot to follow through.

Remember, we are only looking for intraday entries because the stock was setup on a weekly and daily timeframe. and had the potential for at least a multi-day move

Read the sentence above again. This is important.

The next day we would be watching for follow through, to see if TEM is earning the right to continue to be worth our money.

Here were my thoughts after the close:

The next two days TEM acted prefect, with a gap and go and then following through more

The gap and go also presented a potential entry from the opening range.

On a 65 minute timeframe we see exactly the intraday action I like to see. Push up in the morning then tight, stair-stepping higher

Here it is on a weekly chart. TEM looks poised for higher, although it is now a bit extended on the daily TF. It just broke our of its first major base. Yearly estimates look strong. “Extensions” early in a move are a sign of power.

However it is a fast mover and wide ADR. If this is a start of a longer term trend likely there will be many swift pullbacks along the way.

From the entries discussed, you would have about a 25% cushion to work with and many multiples of your risk. Swing Traders would be looking to sell into strength if not already taking partials and position traders would be looking to hold until a definitive break of the 10 week MA or shorter term MA if they prefer.

On a daily chart we can see it is respecting the 10 ema during this move, a definitive break below this could be a sell on weakness for swing traders with the remainder of any position or an early sell signal for intermediate term traders.

On a daily chart a retest of the base pivot would be normal but ideally the next higher low holds higher than that.