Tuesday, April 10, 2007

Dummy Trade of the Day - Seagate Technology (Public, NYSE:STX)

If a stock cannot take out its OR low on a closing basis, it sometimes sets up a nice long opportunity. I look for the stock to regain its 5 period MA and consolidate that win in a narrow range. In the case of STX, we had an inside NR7 bar just before the break. I took a partial as price came back to its OR high. I lost track of time otherwise I would have unloaded 100%.

DNDN capitulated on a huge volume spike mid-morning. I waited for a base to form, allowing for a low risk dummy entry. I exited 50% when price tagged its pivot point and let go the rest when it became obvious, DNDN was going to test its trendline. I tried to short on the trendline breach, but again, there were no shares available to short through IB.

8 comments:

Closet Daytrader said...

Jamie,

Can you tell me if you would go Long on the 9th or 10th (15mins) today on INCY?

I entered Long on the 10th bar, when I saw a strong 9th bar climbing above Opening High. I thought it was a great setup because the prices were consolidating from the 4th - 8th bar with NRs, and Inside-Bars along the way. It just went south afterwards. :-(

Thanks in advance!

Jamie said...

Hi Closet DT,

I see a few red flags on INCY:

Long upper shadow on 3rd bar.
Choppy trading especially when I drill down to the 5 minute timeframe.
Resistance dating back to early February at $7.70.

Usually when resistance is just overhead, I wait until resistance is taken out and then try to get in on the retest (ie. resistance becomes support). You entered as price broke resistance on the 10th bar. When it pulled back in and did not hold $7.70 as support, it resulted in a failed breakout and a signal to exit the position.

Closet Daytrader said...

Thank you so much for you input and your time!

A valuable learning experience for me. Now I can sleep better tonight.

greytrader said...

Hey Closet,

I took the exact same INCY trade seeing the long upper shadow on the 3rd bar and the choppy price action on the 15 min timeframe. There were not many good setups today and it would have been a good day to just stand aside.

I was looking at DNDN that Jamie traded today but I am not confident enough to take that type of trade yet.

Anonymous said...

Hi Jamie,
On the STX trade, did you tighten your stop as you approach 20 EMA reistance? Was your initial stop just below the low of trigger bar?

Thanks, Zen

Jamie said...

On STX, my initial stop was $21.38 which was 2 cents below the support level tagged by the 16th and 17th bars. As price approached the downsloping 20 MA, I moved my stop up to $21.58. I wish all trades were this orderly.

Jamie said...

Zen,

Re. STX - My original intent was to short STX, but I missed the planned entry which was a base and break of the 6th bar low. The timing coincided with DNDN's nose dive which mesmerized me, so I missed the STX short, which in the end, turned out to be a good thing.

Anonymous said...

aha, yes, sometimes this is what we call a blessing in disguise :)

Zen