Tuesday, November 14, 2006

Momentum Stocks - Finding Low Risk, Intraday Setups - eFuture Information Technology Inc. (Public, NASDAQ:EFUT)

NYX - Friday's Action

EFUT - Today's Action

In response to a reader request, here is one way to play momentum stocks intraday. Momentum stocks usually consolidate the morning move midday and into early afternoon. Between 1:30 and 2:30 the volume declines as price comes into the rising 10 period EMA. Don't buy the first bounce off of the MA, wait until volume almost dries up and price narrows accordingly. Just when you feel the stock is barely moving, its time to place a buy order. The low of the last NRB before entry is almost always higher than the preceding NRB's low. If your entry is timed perfectly, you will feel the uptick in volume almost immediately. I usually set my stop about 5-10 cents below the 10 period EMA.

BTW, this is one of my favorite setups and I look for these after lunch on my gapper charts. My CAL trade today follows a similar pattern and risk level and my JOYG trade Friday afternoon was also comparable.

6 comments:

Zoomie said...

Jamie,
Thank you so much for sharing this setup. I had all but given up trading the afternoons!

Jamie said...

You're welcome Zoomie. Works best on the really high volume momo stocks that everyone is chasing.

Glenn said...

Yes thanks for sharing Jamie!!

Misadventures said...

Jamie...I too appreciate that tip...I had no clue as how to trade in the afternoon...I will look out for these now...

Will said...

Awesome! That tidbit has breathed new life into the afternoons for many of us... and word is spreading fast. Thanks very much!

Jamie said...

You're welcome.