Tuesday, February 13, 2007

Dummy Trade of the Day - Nortel Networks Corporation (USA) (Public, NYSE:NT)

NT is one of my watchlist stocks. This morning it opened strong and rallied hard. I didn't want to chase it so I waited for a low risk entry on a pullback to the rising 10 period MA. The first pullback breached the OR high (blue line segment) and I felt that it would just carve out a lower high so I didn't trade it. The second pullback observed the OR high on a closing basis and the NRB (NR7 almost) alerted me that this could be the perfect dummy entry point. I waited for an uptick in price to enter and then it was a game of patience until the stock started to move higher in a meaningful way. It was worth the wait when we got a nice three bar vertical momo move into the close! (The green line in the chart above marks the high of its recent trading range).


NOV was a HCPG pick from last night's newsletter. It gapped up and traded sideways for half of the session. When the 10 period MA caught up to price, we were rewarded with a midday breakout. I went long on a break of the OR high and took booked 50% profit when price hesitated in mid-afternoon. I exited the balance into the close.

4 comments:

Anonymous said...

Dude!

Great trades as always...

Curious on how many trades you pull off in a day. I am a novice trader (just 6 months in) and am impressed with your ability to manage multiple trades and keep a lookout on multiple stocks at the same time. (in another comment you had mentioned that you have some 60 odd stocks that you keep an eye on)

Your thoughts on best practices for cycling through them, looking for potential setups?

BTW, thanks for your comments on RIMM, a few months ago... :)

MD

Anonymous said...

Jamie,
In your opinion, do you think there was any possible low risk entry for EXPD in fading the gap? Thks

Pat

Jamie said...

Hey MD,

Thanks for the compliments.

On average, I usually trade 3-4 positions per day. Today only three and yesterday only two. It depends on the markets.

I have my watchlist of momo stocks as well as the HCPG watchlist stocks which account for a total of about 30 stocks. The remaining 30 come from scans.

I put all of my watchlist stocks in folders in stockcharts.com and in seperate pages on my IB platform, for quick scrolling. I basically have three folders 1. personal watchlist, 2. HCPG watchlist, and 3. scans.

I start scanning for pre-market gappers at 8:00 am.

BTW, my IB platform has a seperate pages for individual sector stocks so that I can quickly see which sectors are hot on any given day.

Volume and orderly price action are the main criteria that guide my trading.

Hope this helps.

Jamie said...

Hey Pat,

Looking at the 15 minute timeframe, EXPD opened with WRB and closed near its lows and then went lower to test support dating back to last August.

Despite the bounce from a technical support level, there was really no low risk entry on the 15 minute timeframe until price cleared the OR high on a closing basis. This didn't happen until after 2:00 EST.

Until the OR and MAs are cleared, there is always the potential for a reversal. Any earlier entry would require some profit taking at the OR high to lock in partial gains.

If you had been watching it closely, you might have taken a low risk entry on a break of the bullish flag pattern that developed midday. Entry on the 2:00 bar. After that it was a relatively easy move to manage.

Good trading!