Thursday, March 08, 2007

Dummy Trade of the Day - Transaction Systems Arch. (Public, NASDAQ:TSAI)

TSAI was a gap fade from last Friday that I found through one of my scans. I liked the way it traded and added to my list of momo stocks. The first chart is the wide range view of the action over the last few days. I noticed that my original entry point from last week was being tagged as support on a daily basis and set an alert so that I could short an eventual failure.

The second chart is the daily timeframe.

The third chart is my dummy short of TSAI on a breach of support. Notice how orderly the trade was - no overlapping candlestick bodies and hardly any wicks. At first the trade was slow and steady, but when price fell below $30.00 things started to really pick up and then the stock just went parabolic. Notice that volume increases in proportion to the size of the candlesticks. At $28.50 the stock capitulated on a huge volume spike. All those people that were still holding after last week's gap down, in the hopes of recovering some of their investment, finally gave in, the pain was just t0o much.

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