Monday, January 22, 2007

Dummy Trade of the Day - Krispy Kreme Doughnuts (Public, NYSE:KKD)

I initially planned to trade short based on today's open, however, when I ran my gap down scan, I had over 80 hits and could not take the time to work through such a long list. So I went the contrary route and used the gap up scan with a manageable 10 hits, to look for some trading opps. It took quite a while, but I managed a good setup with KKD and a failed setup with HANS.

These are 30 minute charts.

KKD gapped up on the open and failed to take out resistance on the OR bar. This was followed by a fairly deep pullback and reversal. As price approached resistance for a retest, the bars started to narrow. The sixth bar was NR7, so I set myself up for a dummy long entry on a break of the NR7 high.

HANS gapped up on the open and had an orderly pullback to support which held for two consecutive bars and I took a dummy long entry on a break of 7th bar high. Unfortunately, the trade went nowhere. I'm blaming the failure on the market and the fact that there was no real reversal signal in terms of candlestick patterns.

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