Friday, December 12, 2008

Gapper Continuation Trade - Amylin Pharmaceuticals, Inc. (Public, NASDAQ:AMLN)

Susan asked about AMLN in the comments yesterday. If you read my response, you'll see why AMLN was on my focus list this morning.

Since this stock is not a gapper, place fibs. using Trader-X guideline # 1. When price breaks out of R-zone, it has a nice thrust to the PDH where I take a partial. Was hoping for a consolidation, followed by an extension, but I got stopped out.

Not a lot of good setups today because the markets were extremely choppy, but while I was perusing my biotech WL, SQNM caught my eye. The base is somewhat choppy, so I didn't put a lot of money to work here (unfortunately). On the B&B setups I like to place my fib. extension lines from the low to the base. Took a partial at the 50% extension and exit as price approached 100%.

3 comments:

Susan said...

Jamie,

How to treat/read offsetting bars? For example, in AAPL today (Dec. 15), the 4th, 5th, 6th bar on 15 min. chart. 4th bar is strong red, 5th is almost an engulfing green bar, 6th bar is red again, engulfing the previous green bar. What does it mean? The stock is weak or ready for reversal? Does it denote anything.

Jamie said...

Hi Susan,

In the context of the AAPL example it denotes consolidation. Price was never able to recapture ORL.

If you get a shakeout, two offsetting bars after capitulation or euphoria, it usually signals a retracement is about occur. For example a tweezer top after a multi-bar, high volume thrust usually leads to a retracement. It doesn't mean a reversal. If the stock starts to retrace on accelerating volume, the retracement can turn into a reversal.

AAPL Thursday printed several offsets as it formed a rounded topping pattern, but until the base broke out on higher volume, there's no trade because it's impossible to know when the offsets will end.

AAPL Nov. 24 offsetting bars from 10:45 to 2:15 until the trading range was broken.

Susan said...

Thanks Jamie.