Mail Bag

CROX

I've enjoyed your blog over the last year. Curious about your thoughts on CROX and where you think buyers would support the price.There is considerable support at the 47ish on the chart which also happens to be the 200dma (where it closed on Friday as well), support at 44.10 from the capitulation high volume day in August too. Do you think these will hold? if not, where would you expect buyers to stepin?

The first chart is the daily time frame for CROX. We see that Friday's low lines up nicely with pivot point support which has been in play several times since last June as highlighted by the blue arrows. Other key take aways here are the capitulation volume over the last two sessions and the proximity of the rising 200 DMA. The angle of the MA is important because a flat or down sloping 200 DMA is not as supportive as a rising MA.

The second chart is the weekly time frame where we can see that CROX has retraced almost 50% from the all time low to last week's high. Also note the wide bearish engulfing bar.

The third chart is the 15 minute time frame. The key takeaway here is the blue line which is the intra-day PP. Price tested and failed the $50.00 area on Thursday and Friday. Usually the third test is the one that succeeds, so set an alert at this level for a potential BO.

If price takes out Friday's low, look for support on a test of the 200 DMA.

Fibonacci:

The SIRF chart below was traded on Thursday (day after wide gap) and the question is how to place Fib extension lines.

If a stock does not extend to the 38% level on the gap day, I usually leave the Fibs intact and look for an extension the following day. This is quite common for very wide gaps. Thursday SIRF gapped slightly lower and held support of the ORH from the previous day as support on a closing basis. The blue line held as intra-day support on a closing basis on Wednesday afternoon and on Thursday it held as resistance in early trade. Once price took out the blue line, it was safe to go long. Price then eventually extended just pennies shy of the target 38%.

Reader Feedback

Hi Jamie, I just would like to update you on my performance this month (the first full month since I first emailed you for some help). I finished the month up 13R with a win rate of 50% and an expectancy of 0.94. I feel good about my results and think that I may truly be successful over the long term. No doubt that your advice was instrumental in my success and I appreciate the time you took to answer my questions.

Not having anyone to confer with about trading, let alone someone to teach me, makes the learning curve that much steeper. I only do this part time and often I find myself trying to do it from the desk of my full time job which I have learned is very difficult to do as trading requires undivided attention and focus.

I look forward to continued learning from your blog.