Trade of the Day - Research in Motion NASDAQ (RIMM)

As per last night's watch list, RIMM was setting up as a classic three day consolidation breakout after digesting last Thursday's bullish wide range bar. The criteria I look for in this type of setup is a narrow range consolidation in the upper price range of the preceding bullish bar on lower volume. I also look for the stock to close on its highs on the third or last day of the consolidation period. RIMM met all of my criteria.

RIMM traded up in pre-market, but the gap was not excessive so I felt comfortable setting a buy stop order above the pre-market high. I booked 50% of my profit as price stalled at $77.00 and exited the balance into the close.

Other Watch List Stocks - ADSK was invalidated because the pre-market price was excessive. NDAQ did not trigger on the open as price retreated. KLAC gapped down, however I was able to initiate a long position in KLAC on the third 15 minute stick. My rationale was that although it opened lower, the first bars were bullish in that there was no overlap of the real bodies despite the long upper shadows. Price was now trading above yesterday's high, so when the third bar started trading above the second bar's close , I went long and held through to the end of the session.