I first profiled TBSI as a watch list stock on June 18th when it was setting up a nice base and break pattern on the daily timeframe. It has since rallied 10 pts. Today it opened strong and tagged the PP setting off my alert.The first chart is the 15 min. timeframe which shows my entry and trade management using Fibonacci extensions as the guide because this stock is trading in blue sky territory.
The second chart is the 5 minute which shows my entry at the base.
The third chart is the wide view of the 15 minute which shows the pivot points.
The last chart is the daily.
The main strategy for trading the PP B&B pattern is to set an alert 5-10 cents below the PP and keep the alert active so you don't miss the move. The third test is usually the successful one. Don't trade a PP break if the stock has just rallied from far away ie. the bottom of the trading range. Using the lower timeframe, look for an orderly base and a low risk, entry point. The break should be accompanied by very high volume which results in a vertical move.
13 comments:
I assume you enter despite the red undecide bar which it a pivot support and resistance.
Sweet trade, as well as awesome details! Keep "making the doughnuts!"
Bigfish
Jamie,
When getting my watchlist ready for the next day, how can I tell which stocks I need to set an alert for and which stocks to basically monitor through out the course of the day? I'm afraid that if I set an alert to a PP that I might miss the move to the PP itself. Should the dailys show that it tapped the PP more then once in order to qualify for an alert? As alway, I'm much obliged.
Yes Jerry,
At the time of entry it was green, but upon completion it was red. :(
These PP setups have a tendency to move quickly so I can't wait for the bar to complete itself, otherwise I might miss the move.
Thanks Bigfish!
Good questions Alex, but you're making me work too hard. ;)
I hope your watchlist isn't too long otherwise, it will require an enormous amount of work to keep the alerts up to date.
I set alerts at the top and the bottom of the trading range that way I can sometimes get a trade moving from the lower end towards the base. The blue lines on the TBSI chart are the actual PPs and I usually give myself enough margin to react before the actual PP is hit.
One clue that I use to determine if the setup is ripe is NR7 - price and volume contraction before expansion. That was the case for TBSI. Look at the 15 minute timeframe and notice how yesterday's price excluding the OR was very NR and volume was extremely thin.
Also check the pre-market trade to see if your stocks are looking to open above the previous day close and/or into the base.
The daily will show if price is moving towards the base. However, many stocks gap into the base, so its not always obvious from the daily that a stock is about to tag its PP.
Understand.
Tell me, if stock finish at high of the day during the last 5 min.
Do you typically close your position at the last min or even sec?
By limit or market?
Jamie,
Beautiful trade. Thanks for taking the time to post these, along with the clear explanations - much appreciated!
Any thoughts on CSCO - seems to be knocking on an upper PP at $30.00. You have to go back to around March of '01 for price levels above 30.00 , so I'm guessing that above 30.00 in July '07 is probably blue-sky territory? Don't know how far back the PP concepts apply, but am guessing that its probably not more than a few years as even long-term folks (and funds) must, at times, redeploy their money for different reasons.
Is there a point in time - maby 2, or 3, or 5 years back - at which you feel the elapsed time has nulified (or greatly reduced) the importance of the earlier PP?
Keep up the good work!
JL
If a stock rallies hard into the close, I stay in until the last minute. Try to exit before the final seconds, especially with NYSE stocks, because the bids dry up awfully fast if you stay in too long.
FMCN at 1pm made an u-turn with volume and created a bb. Daily is start bad but hopefully is would be a trade soon.
what do you think?
Thanks JL,
CSCO has a great chart - I see a narrow rounded base on the monthly timeframe. If it breaks the $30.00 PP, the next PP is $35.15.
Price has a memory so the PPs are forever mainly because technical traders focus on them and sell into strength as price approaches the next PP. That's not to say that once the base is taken out and price ramps up, that each PP will be as hard to break as the last. The big tests for CSCO will be $45.00 and $70.00 as those two PPs were in play over longer time periods :)
Jerry,
Judging by the volume off of the intraday pivot low, FMCN capitulated. Should see a bounce here. The PP is $44.25. Based on a 38% Fib. retracement of the July high to today's low, the target is $46.50
Nice work Jamie and good profits. My quote for the day: "Every stock has its own time frame to be profitable in with fib#, ema's, support, resistance, trend lines, candlesticks as possible trigger points". CLWR traded well in ALL time frames under all conditions, esp with fib# written all over it, interday intraday. This stock must have been mapped all the way up and down. Too precise! Nothing wrong with momo from thde open. Just have to be on the right ticket.
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