Tuesday, January 16, 2007

Dummy Trade of the Day - Suntech Power Holdings Co., Ltd. (Public, NYSE:STP)

STP gapped up above resistance on the open. It rallied until the 10:15 reversal time and then had an orderly pullback. After tagging Friday's high, it reversed, carving out a hammer which closed just above the 20 period MA. When price started moving up towards the 10 period MA, I took a long position. Thanks to HCPG for this recommendation in last week's freebie.

GES and NT were two other morning gappers. They both opened with WRBs followed by a lengthy consolidation. However, GES was the better trade because volume was much higher than average.

2 comments:

Bubs said...

Jamie,

On the GES chart what makes that dummy bar a better entry then the other narrow range bars (Bars 4-11) I tried one of these trades today but played it wrong.

Jamie said...

Hi Bubs,

The sideways action is always very tricky especially if there is no clear NR7 bar. I prefer to wait for a narrow channel break or a tag and bounce off of the rising 10 period EMA. With reference to bars 4-11, 11 is better because it is much closer to the MA. Bars 4-8 are indecisive doji type bars, 9 is bearish, 10 is bullish. However, volume starts to decline on bar 5 and doesn't start to perk up until bar 12, hence the channel break.

Hope this is helpful.