Oct 18, 2026 · 1h 8m
Brian Shannon argues for waiting, not chasing, after market gaps
The Dead Simple Anchored VWAP Setup with Brian Shannon
The episode turns a familiar trading impulse—buying strength quickly—into a rules-based process built around trend, structure, volatility, and risk.
- 1Waiting for a VWAP reclaim or test can produce more disciplined entries than chasing an opening gap.
- 2Higher-timeframe structure, trend alignment, and group confirmation help define both opportunity and risk.
- 3Percentage volatility, anchored VWAP, and staged exits make position management more adaptable across stocks.
Don't miss
The OKTA case study shows how waiting for a VWAP reclaim, rather than chasing the gap, can create a more disciplined momentum entry.
The brief
Brian Shannon’s central rule is simple but demanding: do not chase an opening gap; wait for a VWAP test or reclaim that confirms the move.
The framework starts with higher-timeframe market structure, then adds the five-day moving average, stage analysis, and week-to-date VWAP to judge trend alignment.
Shannon scans roughly 800 stocks, organizes them into themes, and checks whether a group is behaving well before selecting an individual name.
Anchored VWAP extends the analysis from meaningful events such as an IPO, earnings gap, or historical price area, revealing levels where supply and price memory may matter.
The OKTA case study supplies the clearest lesson: waiting for a VWAP reclaim aligned with a rising five-day average can avoid the damage caused by chasing.
Stops, position size, volatility, and scaled exits complete the discipline; the goal is to trade the trend rather than become attached to a compelling story.
What was said on this episode
33 statements · 13 positive · 17 negative · 3 neutral
Traders should wait for VWAP rather than chase opening gaps.
“don't chase the gap, wait for VWAP”
Listen at 1:20
Traders lacking independent judgment should not trade stocks above 10% ATR.
“if you have to ask my opinion about a stock that's trading more than 10 atr you're not qualified to trade.”
Listen at 2:01
Traders should understand and trade in the direction of the trend.
“Understand the trend and trade with it.”
Listen at 2:14
Buying nuclear stocks in a downtrend does not ensure profits.
“that doesn't mean you can just buy nuclear stocks in a downtrend and make money.”
Listen at 2:24
Opening-gap buyers usually face at least some profit-taking.
“majority of the time, they're going to at least undergo a little bit of profit taking”
Listen at 5:30
A stock reclaiming daily VWAP indicates buyers have regained control.
“once it's above that daily volume weighted average price. So that's the point where I say, okay, now we know the buyers have control.”
Listen at 6:07
Broken support generally becomes resistance.
“Support broken tends to act as resistance.”
Listen at 7:58
Traders should avoid setting stops during the first five minutes after open.
“don't set your stop in the first five minutes today. Don't panic and throw your stock away”
Listen at 12:09
A cited study found stocks trade between daily R2 and S2 about 83% of the time.
“83% of the time, I think it was, we'll check my memory when we look at it, a stock trades between R2 and S2 every day.”
Listen at 14:32
Initial protective stops should be based on market structure.
“I want to do it based on market structure.”
Listen at 20:22
Shannon avoids buying a higher high above the five-day moving average without structure.
“I was thinking, well, I'm not going to buy the higher high above the five-day moving average.”
Listen at 21:58
Trend alignment occurs when shorter- and longer-term timeframes both trend upward.
“The trends are aligned in this zone because now we have an uptrend on this timeframe. That's an alignment with the uptrend on the longer term time frame.”
Listen at 25:40
Shannon reviews a master universe of approximately 800 stocks.
“I go through a master list of stocks. It's about 800.”
Listen at 31:53
A successful inverted head-and-shoulders pattern would identify an initial level of interest.
“If the head and shoulders pattern hits, this is our first level of interest.”
Listen at 33:04
Beam is not suitable for buying on strength.
“This is clearly not a stock to buy on strength.”
Listen at 35:05
Breakout buyers in DNA will likely exit within a few days.
“The people who buy this breakout are likely going to end up spitting it out in a few days”
Listen at 36:35
ONDS's broken support is acting as resistance.
“support broken, acts as resistance.”
Listen at 38:11
OKLO, NNE, and SMR are structurally broken and need time to recover.
“structurally they're broken. They're going to need time to heal.”
Listen at 39:01
Weak sector confidence warrants reducing a position below the normal $100,000 unit.
“if my size unit was $100,000, I might only do... $75,000 or $60,000 worth as a stock because I don't feel that I have confidence from the market and the sector.”
Listen at 42:04
SpaceX sellers remain broadly in control relative to its IPO and high.
“the sellers are pretty much in control from the IPO and from the highest point.”
Listen at 46:33
Shannon excludes IPO companies valued below $200 million.
“If it's less than $200 million, I'm just not interested in the name.”
Listen at 47:56
Shannon requires at least 500,000 shares of average volume over 20 days.
“my rule is at least half a million shares over the last 20 days.”
Listen at 48:31
Twenty-day volume averages better capture active, fresh breakouts than 50-day averages.
“the 20-day is what I'm looking for. It keeps you in some of the more active, powerful, fresh breakouts.”
Listen at 49:10
Percentage volatility normalizes ATR comparisons across differently priced stocks.
“the percent is how you normalize those.”
Listen at 50:17
Beginners should start with low-volatility stocks such as UPS.
“beginner traders should start with these types of stocks.”
Listen at 50:50
Micron's elevated volatility likely needs to decline before a lower-risk setup forms.
“this volatility likely needs to cool off a little bit before it sets up in a lower lower risk way”
Listen at 55:35
Previously broken support tends to become resistance on Beam.
“support broken tends to act as resistance”
Listen at 57:30
Buying Cognex after its extended breakout was not sensible.
“Buying that breakout doesn't make sense.”
Listen at 1:00:21
A stock rising 15% in five days can normally pull back 4–5%.
“It's totally normal for it to pull back four or 5%.”
Listen at 1:01:22
Traders should wait for VWAP after a gap rather than chase the opening move.
“Chase the gap or wait for VWAP right here.”
Listen at 1:04:06
VWAP reclaim entries work particularly well in uptrends.
“it works great in an uptrend.”
Listen at 1:05:08
Buying nuclear stocks in a downtrend is unlikely to make money reliably.
“you can just buy nuclear stocks in a downtrend and make money.”
Listen at 1:06:19
Buying downtrending nuclear stocks may cause prolonged losses before buyers regain control.
“you're going to likely experience a lot of unnecessary pain waiting for the buyers to regain control, which might be in six months.”
Listen at 1:06:24
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Books & mentions
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