Monday, February 11, 2008

Dummy Gapper Trade of the Day - Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

The first trade was AKAM, which carved out a mini C&H base on the 5 minute time frame. I entered long on break on an inside bar. My target was R2 PP which lined up pretty well with the 62% Fib. extension of the previous day low to the ORH.

The next trade was RIMM, which carved out a C&H pattern on the 15 min. time frame. The trigger bar was NR7-inside and my target was 100% Fib. extension of the ORL to the base at $93.00. I partialed out after 3 WRB's and exited the balance when price approached the target.


The last trade was AAPL, which had a similar base to RIMM. I wouldn't call it a C&H because the handle is too deep, but I was still expecting a 100% Fib. extension from the morning swing low to the base. The trigger bar here is not inside and doesn't qualify as a pure NR7 because volume expands rather than contract and that seemed to make all the difference in the success of the trade. AAPL came close to the stop and was extremely choppy until after the 1:45 inside bar. It extended quickly but reversed just as quickly at the $130.00 round number level.

5 comments:

anarco said...

I really like your exits Jamie!
Do you have a set criteria for defining your exits with C&H patterns? It seems like sometimes you draw the fib extension from the low of the cup to the base, and today you draw it from the ORL to the base.
Thanks in advance!
anarco

Anonymous said...

Jamie,
For AKAM, your entry is very close to ORH. Why not wait for ORH to be taken out?

RIMM: Can I say that your entry for C&H here is anticipatory as it has not cleared the "base" ($93.32) yet? Can you share with us under what conditions would you anticipate a trade and when would you wait for a break or confirmation?

Thanks,
YR

Anonymous said...

YR (if I may give an opinion),

If you are highly confidence in a pattern, entering off of an IB prior to a key level (ORH, prev day high, PP) puts you in ahead of the BO crowd and with less slippage. I entered CREE early this morning off of an IB while it was in/under congestion from Friday. It had a daily pattern with high odds of trading at new highs today. The early IB entry got me in well ahead of the BO crowd. When it works - genius. When it does not - it makes me scrutinize the setups more.

I also traded RIMM but entered with market order as it was taking out morning highs - that worked fine too.

The down side of trying to enter with BO crowd is demonstrated with my attempt to enter C&H BO in PCU today. I placed order: Buy Stop 97.60 Limit 97.65. The BO blew thru my order with no fill. An early entry or market order would have been much more satisfying.

TJ said...

Thanks Anarco,

My exit strategy for C&H is 100% Fib. ext. or 3 WRBs. I always take a partial after 3 WRBs because price usually needs to consolidate after a big move.

I almost always draw the extension from the low of the cup to the base and that is the technically correct way to do it. Today, I used the ORL by exception because my entry was slightly below the base.

TJ said...

YR,

I agree with Jim. Also, look at RIMM 5 minute time frame. The very low volume as the handle nears completion foreshadows an explosive move. This is part of the C&H pattern and you want to trade the BO of the base within the larger base for best execution and best Risk:Reward.

Jim,

Great trades!