Friday, March 23, 2007

Dummy Trade of the Day - Amgen, Inc. (Public, NASDAQ:AMGN)

In retrospect, the AMGN trade does not look like a good setup because the down sloping EMA is too far away and the risk reward ratio is not great. I think I traded more on news rather than pure chart analysis on this one. I noted pivot point support dating back to April 2005 that lined up closely with the 25% Fibonacci extension and covered my entire position just pennies above that level.


DIVX showed up on my gapper scan and set up a nice tweezer bottom reversal pattern after retracing 62% of the morning move. I was anxious to finish this trade because. as you can see from the chart, it was very choppy.


NBIX I found through my Trade_Ideas unusual volume scan. After the big morning move, it consolidated in two waves (2nd wave made a higher low confirming the bullish consolidation could break higher) and set up a low risk entry for the next leg up. Sweet!

15 comments:

Anonymous said...

Hi Jamie,

How would you have traded CWTR today? What would your stops be in dealing with this trade on a 15 min timeframe?

I entered on a break of the first 15 min bar (there was consolidation on the second bar and the third one broke through on good volume and price movement)

Got stopped out in the 12:00 bar
The failed breakout on the 1:30pm bar discouraged me from trading the breakout in the 2:30pm bar which in hindsight, would have made a nice trade!

MD

Zoomie said...

Jamie, I noticed the blue line at 12.17 on NBIX seems like a fairly good pivot on daily, did you draw it in after the shooting star intraday though?

Babak said...

Jamie,
take a look at SINA. It looks similar to FSLR from yesterday (top of opening range support). SINA did bounce off that support at ~$34.60 but didn't go anywhere. In the end a scratch.
How, if at all, was it different from FSLR's pattern yesterday?

Jamie said...

MD,

CWTR was a pivot point breakout that failed to take flight. The pivot point resistance level of $19,66 matches the OR high. It served as resistance on Feb 1, 7, and 16 and support on Jan.23rd (daily timeframe). Normally a pivot point break sets off a vertical momo move but CWTR did not do anything beyond the breakout.

If I had been in this trade I would have tried to exit with a small profit and move on to something else.

Keep it on your watch list for next week. It might retest the pivot point and if successful it should ascend to the high of the Jan. 19th bearish gap resistance level. And after consolidating that move, it might even attempt to fill the gap.

Jamie said...

Zoomie,

I did draw it in after the shooting star. It matches the October pivot point support and explains the momo move on the break. Tonight's close matches pivot point resistance dating back to Feb. The long-term chart is in the process of carving a really solid base. If NBIX can take out the Feb. highs, I have a target of $20.00 on completion of the base.

Good eye, thanks for pointing it out. I'm going to add NBIX to my watch list.

Jamie said...

Babak,

The SINA trade is very similar to my FSLR trade yesterday and DIVX trade today. The one key difference is on both of my trades I had support from the rising 20 period ema (blue line on DIVX chart and green line on FSLR chart). On your SINA setup, price had already fallen below the 20 EMA.

Babak said...

got it, thanks Jamie

Anonymous said...

Hi Jamie,
DIVX trade:
1) The MA was still downward sloping near your entry, any cause for concern?

2) Was your entry on break of 5 EMA?

3)AS you said, this trade was choppy. Did you think of closing the trade when the 17th bar closed below 5 EMA?

Thanks, Zen

Jamie said...

Hi Zen,

1. Price often falls below the 5 ma on a deep pullback, but I was not concerned because I had support from the 20 ma just below.

2. My entry was planned as a break of the pivot point. You'll notice that the four sticks prior to the tweezer bottom all had a low of $20.10. There was a bit of slippage so I probably got most of my fill as price broke the 5 ma.

3. Yes, That's exactly where I started to question the validity of the setup. I wanted to close the trade, but I changed my mind when I saw on Level II that the bid was filled with prop traders, so why should I sell if they want to get in. By prop traders I mean rather than just ECNs, a lot of the big firms were bidding big orders.

Anonymous said...

Thanks Jamie. How did you know that bid was filled with prop traders?

Thanks, Zen

bl said...

Jamie,
Noticed OR was WB but the 13/15 hammer fell on 3 fib lines from 3 different lows: OR, yesterdays's close and low! Pretty strong magnet there.

bl said...

Jamie,
Add the 13 ema for support too. 13 works on alot of charts too, esp 5 min.

bl said...

Jaime,
I caught 21 >3% naz 15min open "X Style Gaps that closed>open (vice versa for gap dn) after the first 30 min and only 4 had decent patterns after the first hour: simg grow pwer amgn. I counted 5 "dummy style" charts 30 m: cwtr7
cogt2 urbn2 netl4 grow2. Would you agree with the dummies and did you find anymore. Curious to know. Thanks

Jamie said...

BL,

I had all of the names you listed plus a few more but I don't use a 3% filter. The two best gapper plays I found yesterday were DNA - hanging man on the second 15' confirmed on third bar and it fell gracefully at first but then all the stops from those that had invested earlier in the week started kicking in and it capitulated on a huge volume spike.

The other nice gapper on my list was KOMG - a small gap up followed by three inside bars and it took off on a momo vertical move. Originally I had planned it as a retest of Thursday's high, but it did even better.

I passed on the DNA trade unfortunately because I was already committed on the AMGN trade. The KOMG was a miss due to distractions. If you didn't get in on KOMG right away, it was a chase.

I'm using Trade_Ideas pre-market scanner and then I run another scan using stock charts at 10:00.

As you say most of the gappers did not follow through yesterday but some of the names are worth watching into next week. For example ZRAN. Very WRB on the open followed by NR trade all day. But it's consolidating just below a key pivot point and should break Monday or Tuesday. CWTR stalled at its PP but might follow through next week.

Jamie said...

Zen,

Yesterday there were a number of market makers (MM) bidding size on DIVX. Most of these firms have large proprietary trading depts. So its important to look which side of the trade the MMs are on. Yesterday I noticed UBSS, and BEST were agressively trying to buy just above my entry price, so I decided to stay in the trade.

The ECN bid and ask size is less important because they are mostly daytraders like you and I. :)