Thursday, July 05, 2007

Trade of the Day - Amazon.com, Inc. (Public, NASDAQ:AMZN)

AMZN is a basic pivot point trade from my watch list. The stock opened weak carving out a WRB with a long upper shadow and held support of Tuesday's low. The next bar was a doji which could not exceed the 50MA. Meanwhile, the three MAs were converging above price and the 5 and 20 had crossed over indicating a bearish scenario. I placed a sell stop on a break of the ORL. My stop was two cents above the second bar high. I took a partial at the intermediate support level and covered the balance when my target was reached. Although price did consolidate for a long time, it did not close above the downsloping 5 period ema.

10 comments:

Glenn said...

Nice trade Jamie. Thanks for the posting all the info on your trading below, it is really appreciated.

Jamie said...

Welcome Glenn,

Due to popular demand, I will be elaborating a more detailed post on Pivot Points. Hope your trading is going well!

Jim C. said...

Jamie - That is good news because your pivot point analysis and related trading is good stuff! A big problem for traders (me at times) is not recognizing all of the technical factors that influence price movement. For example, today I was short DRI - due to daily setup (previous gap down move and retrace to key pivot point zone) and intra-day weakness. I shorted mid-day in anticipation of taking out ORL. Once the ORL was broken, it appeared that it might trend lower all day. However, the price pivots from yesterday's low and Tues's highs came into play - support led to mini-reversal. Had I only been focusing on the daily setup and the ORL BO, I would not have "believed" the support nor the potential for reversal.

Anonymous said...

Jamie,
Can you have a look at AAPL and ESRX? Would there have been any chance for low-risk entry and managing the trade? Thanks.

Zen

bl said...

Jamie,
Thanks for the great "how I trade" info. Copying it to the X Book.

Jamie said...

Jim,
Tuesday's swing low was a good place to take a partial. After that you could have tightened stop to previous bar high. Once it carved out a higher low, it was time to start thinking about closing the balance of the position or waiting for a stop out.

The pivot points and S/R zones help us plan and manage our trades so that we don't unexpectedly give back most of our profits.

Jamie said...

Zen,

In the case of APPL, it traded in a NR most of the day. The only low risk entry would have been a break of the mid-morning swing high. Using a 5 minute timeframe, you could have set an alert 5 cents below $131.50 and confidently taken the entry because you would have noticed an uptick in volume as price moved up towards the retest price. This is like a PP trade because the third 5 minute pivoted from this price as did the 11:00 bar.

The ESRX trade is trickier. Again you can look for a break of the morning swing high (4th 15 min. bar is the swing high). The bar before the break carves out a higher low so it looks like a reasonable setup and use this 7th bar low as your stop. Use the Fib.ext. as your guide on taking profits because ESRX is in virgin territory. Using the swing high as your base, the extension level achieved was between 38% and 50%.

Everything seems so clear in retrospect, but not sure I would have taken either of these setups in real time. Both of these stocks were extended so the expectation has to be reasonable and partial profits booked at 3-4R levels.

Jamie said...

BL,

LOL, Hope it can be useful.

Prospectus said...

Jamie,

How would you have managed the profit taking on my BIDU trade yesterday? I let 2.5R turn into 0.5R.

http://www.movethemarkets.com/blog/2007/07/05/bidont/

Jamie said...

Hey Prospectus,

The problem with those WRBs is that they sometimes extend too far from the 5 period MA and then there has to be some retracement.

You had a great entry. The previous day BIDU pivoted off of $185.85 in the morning, so I would have taken a partial as price approached that level. Then I would have moved the stop for the balance just below the the WRB as it was touching the 5 ema after completion.

All that basing yesterday was leading into today's big move. Hope you were able to catch that nice B&B on BIDU this afternoon.