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The Episodic Pivot Model Book

How to trade gap-up stocks: the rules, and 19 charted examples of what worked and what didn't.

  • 38 pages
  • 6 step framework
  • 19 charted examples
Cover: Episodic Pivot Trading Strategy, a Ghost Alpha model book
Gap-ups work because the majority of traders don't understand them.

I went back through the history of the biggest gap-up winners, marked up the charts, and wrote down the rules that kept showing up. The rules come from what worked and from what didn't, and both are in here.

What's inside

Every rule and every example in one place

01

The catalyst

What counts: earnings, guidance, a new product, a new service, new management. Anything that qualifies as the N in CAN SLIM. What doesn't: mergers and acquisitions.

02

The 4 qualifiers

  • A 100+ day stage one base
  • Above the 200-day
  • A gap of at least 10%
  • Institutional quality only
03

The six-step framework

Base, catalyst, gap, entry, stop, trail. All on one page, plus the off switch: uptrends only.

04

How to trade it

The first-hour entry, the gap-day low as the stop, the 1% risk ladder in three tranches, the delayed EP, and managing the winner off the 10, 21 and 50-day.

05

16 winners, charted

From clean setups like BE to the shakeouts and buy-backs like ANF and CCJ, to messy edge cases like VKTX.

06

The failures

CROX, SOFI and AFRM, one by one, and the four lessons that came out of them.

07

The gap-day low lesson

Winners test the low of the gap-up day and never violate it. The failures taught me its importance more than anything else, and most of my other rules are built on it. The stop is sacred.

The framework

Six steps, one off switch

  1. Base100+ days, flat, above the 200-day
  2. CatalystSomething new about the business
  3. Gap10%+ in a liquid leader
  4. EntryCross of the first-hour high
  5. StopThe gap-day low
  6. Trail10 / 21 / 50-day
The six-step Episodic Pivot framework page from the book

Sample pages

What worked, and what didn't

Example 1 of 16: BE, a clean setup
Winner. BE: a 250-day base and a textbook EP.
Example 4 of 16: BROS, the gap-day low lesson
The gap-day low lesson. BROS tested the low right away and never undercut it.
A failure example from the book: CROX
Failure. CROX based under the 200-day, undercut the gap-day low, and never gave a re-entry.

About the author

George Orlando, Ghost Alpha

I worked at William O'Neil & Co. from 2013 to 2016, where I learned the classic patterns and pivots inside and out. Gap-ups were different. Everyone had a different answer for how to handle one, so for years I stayed away from them.

This book is the study I finally did for myself, built on what I took from William O'Neil, Stan Weinstein, Qullamaggie and Pradeep Bonde. I write Ghost Alpha on growth stocks, technicals and process: sizing, risk, moving averages, and when to sit in cash.

Take what is useful and make it your own.

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