Thursday, March 22, 2007

Dummy Trade of the Day - First Solar, Inc. (Public, NASDAQ:FSLR)

FSLR gapped up on the open and printed three consecutively wider WRBs on increasing volume - Cramer effect. After taking out the 50% Fibonacci extension, it reversed in an orderly fashion and came all the back to the OR. On a hammer reversal bar, it managed to close above the OR high, setting up a reversal and long entry after confirmation. The afternoon move, extended beyond the 62% level before carving out a hanging man, signaling the end of the move.

MOT gapped lower on the open. After consolidating the wide gap down for an hour, it made a move lower. I entered just before it took out the OR low, because I felt it might be too hard to get in after the break. The target was the 25% Fibonacci extension because it lined up fairly well with support on the daily timeframe.

NUAN is an example of a failed WOR base and break pattern. I took this trade knowing that yesterday's extended move was a caveat. However, the volume was very bullish, so I weighed the odds and took my chances. The breakout bar was WR as expected. The next bar was narrow, again as expected. However, I was looking at the 5 minute timeframe and suddenly felt that price was going to come back in, so I tightened my stop just below the NRB and I was stopped out. Normally this setup moves very quickly. When I felt price stall, I did not give the stock a second chance. This is trade mangement - don't let a pattern failure turn into a loser.


Glenn said...

Nice trades Jamie. I traded and watched FSLR all day and never saw what you see, ah-may-zing.

Jamie said...

Thanks Glen,

You can draw a line above and below your OR on the 5 minute as well. That way when price comes close to the lines you can decide if there is a trade there.

Flatwallet said...

Jamie nice trade. That's exactly how I wanted to trade it. I had it up but didn't put it up offically on paper. Thanks for the heads up on the book.

Jamie said...

Thanks and welcome LP.

Anonymous said...

On FSLR trade, what was the confirmation? And your entry is 12th bar on break of 11th bar high? Just curious to know if you think there was a good reversal setup after the initial 3 strong upward move and failure to clear 50% fib?

On NUAN, how did you feel the price was going to come back in? Was it the relatively high volume on 11.40 ET 5 min bar? Or was it something else we can look to, other than your intuition? :)

Btw, since you track quite a number of stocks, how many PC monitors do you use for trading. Can you share how you setup in each PC? Thanks


Jamie said...

Hi Newz,

A hammer reversal bar after an orderly pullback doesn't need confirmation, I was just being extra cautious. I waited until the next candle closed green and entered on the open of the following (12th) candle. The momo move off of the open was on increasing volume and the pullback on declining volume. That usually means the bias is bullish, so you can look for a reversal. Volume on the hammer reversal bar was higher than the red bars leading into it - classic tape reading reversal setup.

On NUAN 5 minute, it was starting to feel like a rounded top - too much supply, so I tightened the stop.

Three computers - one for scanning, one for esignal and one for IB platform. I'm not very sophisticated when it comes to technology, for example, I don't even know how to program my setup so that I can execute from esignal directly. Only use two screens for esignal.

Babak said...

re MOT: what daily support do you mean exactly? I only find support at around $14.50 April '05.

re: FSLR, how did you stay in through the 1:15pm/16th candle? what was different about it, compared to say, the NUAN 'rounded top'?


Zoomie said...

Newz, great questions! I say that cause the answers are gonna be helpful ;)

greytrader said...

I do not understand your MOT target either. Which daily support ? The target was the 23.6 % fib extension, how did you get to the 100 % value of 16.60 ? Pretty cool however you got to it :-)

Jamie said...

Thanks Zoomie.

@Babak and Greytrader

I see a median pivot point support level for MOT between $17.42 and 17.52 dating back to 2004 early 2005. A few dates where this level served as resistance on the way up are: 13.05.2004, 19.10.2004, 15.12.2004 and 18.01.2005.

I'm not great in math so I'm not sure what your numbers are Greytrader. I hope the first part of my answer responds to your question.

Good question on FSLR Babak, but I'm afraid I don't have a good answer. The truth is lunch and my stop did not get hit.

greytrader said...

Thanks, I see it now. Pretty amazing how prices stick to Fib extensions.

Jamie said...

Those pivot points are so important because everyone is focused on them.

Good Trading!