My CMG alert sounded as price crossed $84.00 (yesterday's low). I waited for a low risk dummy entry to present itself. Price consolidated sideways and then carved out a confirmed hanging man, so I entered short. I locked in a partial after 1 pt. and was stopped out when price started to rally towards the 20 EMA.
My AMZN short setup was a little disappointing. I went short as the second bar took out the real body of the first. I took a partial after 1 pt. and was stopped out on the balance. The one thing that was nagging me about AMZN was the bearish island. There is a 10 cent of empty space between the pivot low from last week and today's high. I keep thinking that AMZN will try to fill that gap before going lower. Maybe I'm just a stickler for details.
I was happy that this short on CAL took out the morning low, generating a nice return.
Overall, a choppy session. CROX looks like it may be setting up for a little correction.
18 comments:
Nice one on CAL, Jamie! I traded it as well, but as a swing from yesterday's open. Thanks for all of your teaching on your blog. Because of what I've learned from you, I actually took the same exit as you did, covering near $34--I spotted the pivot point on the daily chart. Any trade executed like Jamie would do it is a good trade!
Thanks and congrats on the trade Prospectus! I'm sure there will more good setups with CAL shortly
Jamie,
Re: your CMG trade...
How much of a concern for you that the prices might not go beyond the Lower Shadow of the Hang-man, at the moment of entry?
Because I would enter 2 bars later on this same setup, and I'm trying to understand what was going through your mind at that time.
Thanks!
CDT,
The hanging man is a pretty strong sell signal. Once the HM was confirmed, I felt that price would take out intraday support and head towards daily support near Thursday/Friday lows.
It's all a balancing act. How many points in my favor versus the potential hurdles. I also liked the proximity of the declining 5 period EMA. Usually a stock sets up a reversal after it is has strayed too far from the MA and that is not a good time to enter, but can be a good time to lock in some profits.
CDT,
I just read a few posts on your blog and I see that you are very focused on covering your shadows. If I may, I'd like to suggest that you try putting more emphasis on entering as close as possible to the 5 period EMA once your stock has established direction. That means the ema has a nice slope to it.
Good trading!
Hi Jamie,
What was the exact point (pricewise) you entered CAL? After looking at the arrow on your chart, it looks like you entered it at the doji above the 5 EMA. I'm just wondering what made you go short at this point, since bars were actually above the 5 period EMA and it was sloping upwards. The next long red bar did make the direction clear.
I actually went long at the exact point you went short, so just wanted to figure out where I went wrong.
Thanks,
AJ.
Hi AJ,
I shorted just under $34.80. I was waiting for price to test the downsloping 20 ema. When it failed to close above the 20 and started coming back in, it was a reversal signal for me. That small doji above my entry looked like a tiny gravestone doji.
I guess I did anticipate a little on this entry. The proper technique would be to wait for price to take out the 5 period ema.
Thanks Jamie, that clarified a lot of things.
Jaime,
Looks like u use the CAL 20 ema to bounce of off and short. Do u use the 20 much or mostly the 5? I use the 5/13 ema.
Welcome AJ.
BL, I use 5/20. I especially like convergence and crossovers to time my entries. I just tested the 5/13 on my CAL trade and my two little dojis both closed above the 13. But the two MAs did kiss.
Jamie,
Thank you so much for taking the time to critique my practice. I absolutely appreciate your time and valuable information. I will certainly take your advice and work on my entries.
Million Thanks!
Hi Jamie,
I Thought you switched timeframes to fine tune your entry on AMZN. There is a nice entry spot(inside bar, kissing 5ema) on 5mins chart very close where you took your entry on the 15min.
Joao, Exactly, I had both the 15 and 5 minute timeframes on my screen as I took the AMZN entry.
CDT,
Your welcome. Just to clarify the point I was trying to make.
On a flat or shallow base and break setup, I would cover my shadows. On a trending setup where there is a nice slope to the 5 period EMA, I look to enter as close as possible to the ema.
Jamie,
Your comment "...enter as close as possible to the ema." How do you justify the 'closeness'
1) Is it pure 'visual' on the chart?
2) Or do you take the stock price into account? (For example, a gap of $0.5 between the stock price & ema, is a lot closer for a $100 stock vs. a $10 stock.)
CDT,
It is visual and ideally you want to see a reversal candlestick bar as well. The stock price should not matter, but I do find that higher priced stocks, in general, trade better than lower priced stocks. The key is volume. A lower priced stock running on high volume will trade as well as a higher priced stock.
I just looked at your blog again and I think I know what you need to focus on - "HIGH VOLUME". You mention HOKU and NVDA. Those are the stocks I traded today and hopefully, soon, those will be the types of gappers you select as well. Are you looking at multiple timeframes when you select your picks, or just the 15/30 minute?
Jamie,
How 'High' is high? Is this in comparison to the the stock's Avg. Volume? Still, when I start my day, if I'm looking at a 15-min chart, I don't know how to judge its volume by looking at the first few candles. Some stocks' volume just died down later in the day.
Right now I'm looking at 15mins and occasionally, 10mins. In the beginning, I strictly looking at 15mins but I noticed that I'm not seeing any Reversal Candlesticks, it was then I started to look at 10mins... out of boredom.
Thanks for taking the time!
CDT,
Sorry, I mis-spoke re: high volume. The volume is relative to the previous days leading into the gap. The volume on your three trades today is fine.
One point on the ANDE trade re: covering your shadow. Try using a two tick margin. Set your buy order two ticks above the shadow. In the case of ANDE, your trade would not have been executed. Then you could have planned the next shadow 7th bar and not been stopped out. I still think its more important to get in closer to the MA than covering the shadow. Your stop will always have to be below(above) the previous bar, otherwise you will get stopped out of perfectly legit setups.
I like to cross reference my setups on lower timeframes so you might want to add the 3/5 min. timeframes to the mix. Good B&B patterns are easier to spot on the lower timeframes.
Good Trading!
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