Friday, February 09, 2007

Dummy Trade of the Day - Lam Research Corporation (Public, NASDAQ:LRCX)


It's important to note that $45.00 is a key support area for LRCX over the last week or so. After breaching support in the early going, LRCX stabilized and consolidated sideways towards its downsloping 10 period MA. Notice how volume declines during consolidation. Knowing that a second breach of support, could trigger a sell off, I started shorting just prior to the break and picked up a few more post break. This is a low risk dummy entry with an initial stop just pennies above the last bar in the pennant. As expected, the break of $45.00 generated an immediate price and volume expansion. I covered 50% of my position after a 1 pt. gain and tightened my stop to $44.50. In the last hour, I kept moving my stop to the high of the previous bar and was eventually stopped out.

4 comments:

Joao Henrique said...

Jamie,

As usual you got a nice trade!

The people who criticizes you should read Graifer book "Techniques of Tape Reading". So they can understand why you cover 50% at that bar. This book is a must!

Here in Brazil, we don't have brokers who offer per share commission. So, for daytrading, I use to close my position at once.

I just ordered Pring's Technician's Guide to Day and Swing Trading.

cheers,

JH.

Jamie said...

Thanks Joao,

I'm glad you enjoyed the Graifer book. It is a great book that few traders have bothered to read. It is especially useful for identifying entry and exit points and covers the capitulation and euphoria aspects of momo trades very well.

You will also enjoy the Pring book which comes with a DVD that I watched several times to master the technical aspects trading. I'll be interested to hear your feedback.

Enjoy and good trading!

estocastica said...

Jamie, what a pretty trade. Well done.

Jamie said...

Thanks Esto,

I think that the $45.00 round number was key to the three bar vertical drop which followed the breach.