Thursday, April 05, 2007

Dummy Trade of the Day - Dendreon Corporation (Public, NASDAQ:DNDN)

The first chart is a wide view of the 15 minute timeframe of DNDN's trading pattern since it gapped up last week on news of the FDA committee voting in favor of its prostrate cancer drug "Provenge". I traded it on that first day for a bounce mid-day and I tried to short it on Tuesday but there were no shares available. Knowing that it was heavily shorted, I decided to keep an eye on it for a possible short squeeze and set an alert at Tuesday's high. Today the alert went off. At first I thought it was a retest of the high, but then it started to consolidate in a very narrow range. A quick look at the daily timeframe and I knew that yesterday's bar was NR7. So I set a buy stop order two ticks above the base of the narrow trading range. The 15 minute timeframe below outlines my setup, entry and exits.

NTRI is a slightly different type of base and break pattern because the base extends over two trading days. Notice how the trade doesn't really take off until it breaks above the upper shadow from yesterday afternoon. I exited my position at the 62% Fibonacci extension of this morning's low to the base. After tagging the 75% extension, NTRI carved out an ominous looking tweezer top and came all the way to its base - a round trip.


Anonymous said...

Long on DNDN what do you think of EGHT ,EGHT should gain based on Vonage injunction news, I expect EGHT moves higher next week at $1.51 Analyst has BUY rating 2/20/07 with $4 target.

Jamie said...

The near-term pivot point resistance for EGHT is $1.56. Once it breaks through that level on a closing basis, it will have a better chance to move higher. Then the goal will be $2.00. There's a lot of long-term resistance at $2.00, so unless EGHT becomes a story stock, I think $4.00 is a long way off.