Failed new high of day: the lower-high rails I use on liquid names
Posted: Wed Sep 30, 2026 9:38 pm
One of the few short setups I trust on liquid names is a failed attempt at a new high of day. The name pushes above the morning high, can't hold it, and then makes a lower high on the retry. I don't short the first poke. I short the lower high, with a stop that tells me quickly if I'm wrong.
## Rails
- There must be a clear morning high of day, set at least 20 minutes before the attempt.
- The attempt trades above that high and then closes a 1-minute bar back below it.
- I wait for the next push up to fail below the attempt's high. That's the lower high. Entry is a short on a break of the low of the bar that made the lower high.
- Stop: a few cents above the lower high. If that distance is over my max cents for the name, I pass.
- I need a locate or an easy-to-borrow name before any of this matters.
## Worked example (illustrative)
A $67 name sets a high of day at 67.80 at 09:48 ET. At 10:22 ET it trades 67.86, but the 1-minute bar closes at 67.74. At 10:26 ET it bounces to 67.79 and stalls. That's the lower high, below the 67.86 attempt. The 10:26 bar's low is 67.68.
At 10:27 ET it trades 67.67 and I short 200 at 67.66. My stop is 67.83, 17 cents above the entry, a few cents above the lower high and inside my 20-cent max for this name. At 10:34 ET it reaches 67.40, where I cover half for 26 cents a share. I move the stop to 67.66 and cover the rest at 67.52 at 10:41 ET when it stalls near VWAP, for 14 cents.
## Failure modes
- Shorting the first print above the high on the idea that "it can't hold." Sometimes it can, and that's how trend days start.
- Ignoring SPY. If the index is making new highs at the same moment, my short is fighting the whole market.
- Moving the stop up because the lower high is "almost" holding.
## When to skip
- If the name is hard to borrow or the locate is expensive, the short isn't available to me.
- If the morning high was set in the first five minutes on huge volume, it's often not a clean reference.
- Any time the spread is wider than 3 cents at the entry.
Diagram: a price sketch showing HOD, a poke above it, a close back below, a lower high, and the short entry arrow under the lower-high bar with the stop marked above it.
## Rails
- There must be a clear morning high of day, set at least 20 minutes before the attempt.
- The attempt trades above that high and then closes a 1-minute bar back below it.
- I wait for the next push up to fail below the attempt's high. That's the lower high. Entry is a short on a break of the low of the bar that made the lower high.
- Stop: a few cents above the lower high. If that distance is over my max cents for the name, I pass.
- I need a locate or an easy-to-borrow name before any of this matters.
## Worked example (illustrative)
A $67 name sets a high of day at 67.80 at 09:48 ET. At 10:22 ET it trades 67.86, but the 1-minute bar closes at 67.74. At 10:26 ET it bounces to 67.79 and stalls. That's the lower high, below the 67.86 attempt. The 10:26 bar's low is 67.68.
At 10:27 ET it trades 67.67 and I short 200 at 67.66. My stop is 67.83, 17 cents above the entry, a few cents above the lower high and inside my 20-cent max for this name. At 10:34 ET it reaches 67.40, where I cover half for 26 cents a share. I move the stop to 67.66 and cover the rest at 67.52 at 10:41 ET when it stalls near VWAP, for 14 cents.
## Failure modes
- Shorting the first print above the high on the idea that "it can't hold." Sometimes it can, and that's how trend days start.
- Ignoring SPY. If the index is making new highs at the same moment, my short is fighting the whole market.
- Moving the stop up because the lower high is "almost" holding.
## When to skip
- If the name is hard to borrow or the locate is expensive, the short isn't available to me.
- If the morning high was set in the first five minutes on huge volume, it's often not a clean reference.
- Any time the spread is wider than 3 cents at the entry.
Diagram: a price sketch showing HOD, a poke above it, a close back below, a lower high, and the short entry arrow under the lower-high bar with the stop marked above it.