Solars were hot this afternoon. I missed the big move in YGE, but I did manage two low risk setups in STP and ENER. These small narrow range consolidation bases precede big moves and are much easier to see on the lower timeframes.
LEH was a gapper which eventually set up as a flat base BO, but it failed to reach even the 38% Fib. extension of the ORL to the base (upper blue line) due to lack of volume (summer Friday afternoon). I took a partial after it stalled at $26.00 and closed EOD.
10 comments:
Jamie on your LEH trade when you refer to the flat base breakout are you referring to the base at $25 or $25.25?
Did you use the opposite side of your trigger bar as a stop?
Would you mind giving me your opinion on my entry. I decided to enter off of the 11:00am hammer bar that tested the 5ema,ORH and R1 (QT show R1 as $24.71), exited a few cents shy of $26.00 which also happened to be 38% fib ext. Lack of volume was a little discouraging but I decided to stick with it? Too risky?
Thanks!
PDT,
The flat base is the upper blue line at $25.25. Often the flat base leads to a parabolic move because the base forms over several hours. Not the case with LEH and I was quite disappointed that it stalled at $26.00.
Funny, Esignal R1 is at $24.44. Bars 3 and 4 form a bearish tweezer top which usually results in a pullback. The pullback was shallow allowing your trigger bar to hold as support. I prefer to wait until after the pullback because I never know how far the retracement will go.
Too risky for me, but if you're happy with it. Basically, I'm impatient, I want to get in when it's about to take off.
Jamie,
Looks like you are paying less attention to gappers per Briefing or otherwise and focusing on your/a WL.
BL,
When the market gaps up like today, the gap scan results in way too many hits so I prefer to stick to the WL, momo scan, and sector strength.
Thanks for the comments. I should have been away of the tweezer top on bars 3 and 4. The shooting star prior to my entry was not that encouraging either. I just got caught up on the NR7 trigger bar that closed right under $25.00. I was hoping that 5ema would provide a nice upthrust. There is a word I should stop using.... 'hope'.
I definitely like your way of getting in right before it takes off. That is something I am striving to become better at, obviously my timing is a bit off.
Would an exit have been justified around noon because it looks like it could have been forming a bearish rounded top?
Thanks.
nice call on STP, .... was beaten up pretty bad, we missed is but had it on the dip watch list.
cheers.
PDT,
If the stock doesn't take off right away, and you find yourself in the dead zone, you basically have to live and die by your stop. As long as the stop is meaningful ie. strategically placed, you can hold and pray. It's always easier to hold through a shallow retracement then to sell and try to get back in later. If the market starts to sell off and your stop is really wide, then it's probably best to get out and preserve capital.
Basically, what happenned with LEH was a huge thrust up from an extremely oversold level. The last bar from Thursday plus the first three bars from Friday morning constitute a flag pole. That move or pole needs a long time to consolidate in the form of a flag. The narrow price action between 10:15 and 2:00 EST is the flag.
Once you've taken a position and it doesn't move out of it's base, you can always step back and try to analyze what's going on from a wider perspective. Then it's easier to make a decision about holding or selling.
Thanks BOTD,
Yeah, the solars had been hinting a reversal for a few days.
Hey Guru,
I learned the technique of base breakout from you and was able to score good for leh. thanks a million.
Just want to know your thoughts on level 2. Do you ever use it? Do you think it tells the story for next 5-10-20 minutes? I have bought the whole book on level 2 and after reading more and more I am more confused than ever. Thought of asking you..
looking fwd to yr comments..
ordered the book of john carter from your recommended listed reading and i must that this is one of the best book i have ever read. john carter charges huge money to sit with him and watch his trading. I was wondering how much would you charge to see your trading day. Me and my friend are very interested in finding a mentor.
thx chief
shah
Thanks Shah,
Glad to hear you scored with LEH.
Level II is an important aspect on my trading. I use it mainly for market depth, and spread. It depends when your book was written. Most of the institutional buyers/sellers are hidden so Level II isn't as useful as it used to be. I will do a post on Level II one of these days.
Carter has a great variety of setups - Good Book.
I'm still learning, so mentoring is a long way off.
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