RIMM was my only trade on Friday. After gapping up on the open, it made a decisive move lower on high volume. The fourth and fifth bars were inside on declining volume in the lower half of the third bearish WRB. The S2 pivot point level (red line) held as resistance and the second inside bar closed near its low. Short as price crosses below $118.00. The setup is quite obvious on the 5 minute chart below.The two blue lines mark potential support at the gap open from earlier in the week, and support at $113.00. As you can see from the 5 minute chart, the gap open level did not provide support on the way down, but it did provide resistance in the afternoon.
The price and volume pattern on the daily chart below looks like a bearish rising wedge, with Friday's bearish engulfing bar setting up the breach for the next leg lower. However, we also have a convergence of MAs which could grab and hold price up. We'll see how this plays out next week.
9 comments:
Jamie - I'd like to get you thoughts on two trades and what eventually pushed one into the sky and the other into the cellar. The trades are TIVO on Thursday and FRPT on Friday. After gapping both basically flat-lined on the 15 min charts. The 5 ema caught up to them but didn't immediately move them. I've been looking for some other technical signal that finally pushed them off their base but haven't been able to find it. Do you have any thoughts as to what eventually got them moving? Any input you have would be greatly appreciated.
Joe
Jamie,
Any thoughts on the general gap fade on Friday? Perhaps due to tech DELL report. Would be nice to know when to fade the gap vs the continuation gap. LULU NVDA AAPL, etc faded
Add-My Thrs DELL Dec22.5 put option .80 didn't take and ran to 3.00 Fri. :)Good option gains on RIMM puts too.
Hey Joe,
The TIVO base is a flat base breakout. After bar four, you get a lot of increasingly narrow bars on declining volume (price and volume contraction before expansion). When trading these types of setups, I usually place an buy stop order two pennies above the highest point on the base. No point in trying to anticipate and get in early because it could flat line all day. However, there was a noticeable up tick in volume on the BO bar and that's what you want to see. Generally speaking, the longer and flatter the base, the bigger the move.
FRPT is not as obvious, because the base is not quite as orderly as TIVO, but the same basic principles apply. Here again the test of the fourth bar low on an up tick in volume, precipitated a fast move lower on accelerating volume.
BL,
The NAZ gapped up close to the 50% Fib. retracement of the Oct-Nov swoon. It also gapped up around this level on Nov. 14th after a one day rally and faded as well. The DELL weakness certainly didn't help, but I think it's more about price having a memory and a lot of people selling the open after such a big four day run.
BL,
Are you favoring options over stocks these days? I'm a bit of a dummy when it comes to options, but I would like to find a good book on the topic so that I can start getting my feet wet.
Jamie,
I forget about naz fib# benchmarks when trading gappers. Need another computer just to have naz chart running with benchmarks/trendline/etc.
Options-I'm in the dark as much as you. I figured I was willing to risk $800 to gain X profit out of a possible -10% stock move. It turned out to be
$3000(hi) or $2200 profit!! Nothing complicated. Perhaps your broker knows. I'll ask around. Right now I'm focusing on gap downs premkt and 10 min into the open. Friday 7/11 were prmkt's: dell frpt mogn ment big acgy divx + sirt cats wso mpel. 6 chart per page, all 15"s then all 30" and "restrain" myself from looking at anyother strategies until I can master focusing on one strategy at a time. It's when I get distracted by chart surfing I miss the trades.
hey jamie......
watz the software you use for 1 minute charts ?
I use Esignal for all my intraday charts including 1 min.
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