Friday, December 22, 2006

Dummy Trade of the Day - Red Hat, Inc. (Public, NYSE:RHT)

My strategy today was focused on low risk because of the holiday reduced volume. RHT gapped up on earnings and volume was very bullish. Still the gap was so wide, I decided to wait for a consolidation before going long. Patience finally paid off around 1:30 EST when price met up with the rising 10 period MA. Shortly thereafter price broke the narrow channel on an uptick in volume.

NT was another very low risk entry I found in early afternoon. Nortel Networks (NYSE:NT) has had quite a run since its reverse stock split. It showed up on a gapper scan last week and at first I ignored it but I like the volume and I'm adding it to my list of momo stocks.

11 comments:

Trader-X said...

Good trade - but I posted it first!

Brilliant minds think alike - Happy Holidays to you and your family.

Jamie said...

You're right, you posted it first, and by the looks of it, you entered it first.

Thanks X, and Happy Holidays to you and yours!

Anonymous said...

NIce work to find somthing bullish in today's mrkt. Happy holidays Jamie.

BAsim.

Jamie said...

Thanks Basim,

Happy Holidays to you too! I enjoy reading your comments and trading ideas. Look forward sharing some more in 2007.

Anonymous said...

Hi Jamie,

Great work on your blog - follow it quite regularly.

I like your assessment of the market and wanted to pick your mind on RIMM - it should have gone up after their smashing results were posted...

Curious if I am missing some sorta technical angle on it.

Reg
MD

Yaser Anwar, CSC (Trader- Equities & FX | Quoted 6 Times In WSJ, Twice in NYT & FT) said...

Jamie-

Good clear charts and explanation as always. Do you ever trade emini futures?

Jamie said...

Hi MD,

From a technical perspective, $140.00 seems to be RIMM's pivot point. The last two times it approached that price (Nov. 30th and Dec. 18th) it turned around and came back in. The bullish guidance, Bear Sterns upgrade, and multiple tgt. increases should have propelled the price higher, however, for the time being, the pivot point is king. Also, lower margins is a dirty word when it comes to outperformance.

We have a small bullish gap and the 50MA coming into play next week. However, yesterday's stick and volume are very ominous and I wouldn't want to bet that either of these will hold.

Jamie said...

Hey Yaser,

Thanks, No I've never traded futures of any kind although I do monitor them for market direction.

Since I started trading I've always looked for high liquidity. Futures don't fit that requirement. Also, my intraday trading is focused on price, volume, and technicals. Most successful futures traders rely on oscillators for entry triggers. I've tried in the past to use oscillators as triggers for stock entry and have found that there are too many false signals (ie. a crossover that turns out to be just a kiss). Volume doesn't lie so I'm happy to stick with it.

Since I've embraced the low risk, dummy trading style (Trader X and Trader Mike), I'm even less inclined to wander into futures trading because they require diametrically opposed trading styles.

BTW, your blog is awesome. I don't know where you find the time to put together so much great content as well as full time studies.

Happy Holidays and best wishes for 2007!

Yaser Anwar, CSC (Trader- Equities & FX | Quoted 6 Times In WSJ, Twice in NYT & FT) said...

tx Jamie- happy holidays and best wishes for 07 to you too.

Yaser Anwar, CSC (Trader- Equities & FX | Quoted 6 Times In WSJ, Twice in NYT & FT) said...

J-

What screen do you run for gapping stocks? Are they usually built into your esignal? Ever tried tradestation?

Jamie said...

Yaser,

My four main sources for gapping stocks are my IB (Interactive Brokers) pre-market movers filters; Briefing.com; Trade_Ideas scanner and Stockcharts realtime extra scanner. Sometimes I also check Quote.com gappers list.

I've never used tradestation and I understand it's very pricey and availble only through brokers. I use Esignal basic for realtime charting and Level II quote screens. I'm trading mainly off of price and volume so my platform needs are fairly basic.