Thursday, January 08, 2009

Keying off the Daily

The morning action was narrow range and choppy so it was hard to find suitable setups.

CELG, printed 3 IBs after selling off all week, so I took a chance on a reversal. Once price was able to close above the downsloping 20 EMA, things picked up nicely.

AMZN and GRMN have strong daily charts as discussed in the comments last night. AMZN was a symetrical triangle waiting to BO and GRMN set up a Cup & Handle.

The XLE trade is from yesterday. From a reader:

XLE gapped down today from shooting star daily bar, which is very bearish. Which would have been a better short entry in your opinion:

1) break of IB low (2nd 15 min bar)
2) break of shooting star low which is unable to closed above 5EMA on 5min (9.50am ET bar)

The first 15 min. stick is a hanging man or red hammer. Since price doesn't test the high, we conclude that it is a hanging man. However, the doji which follows is indecisive. I like the action on the 5 minute, but I would scale in until S2 (dotted red line) is taken out.

I place my fibs. on the 15 minute timeframe and intraday pivots on the 5 minute, that way I see the setup from both perspectives.


Tyler said...


Thanks for the great explanations of the setups. Great trading.


yr said...

Thanks for piecing up the XLE trade. Quick question on adding to full size after taking out S2 & ORL: The entry would have been after 3 consecutive red bars, which is higher risk entry??

Anonymous said...

Looks like theres some nice potential in FLS, theres a descending trendline from yesterdays 11:45 15min bar to todays last 15min bar w/ declining volume. I've also been keeping an eye on MDT. Its been basing on the dailys for some time and looks like a possible BO around $33. One concern is the 50 day SMA in close proximity. We'll see.

PDT said...

Questions on the CELG trade.

A) Why did you choose to draw your fib lines from ORH to ORL instead of PDH to ORL? Because it was kind of wide?

B) Aren't you making the trade in the heart of the R-Zone which is something you are against?

C) Do you see a C&H there? If you look at the 5min it actually looks like a Cup and double handle.


Jamie said...

Thanks Tyler

Jamie said...


Yes, but you have a buffer from scaling in. I would expect a retest of S2 if price consolidates after 3 consecutive red bars. If price closes above S2, it's a red flag. Also, the first and last hour can move much faster than the rest of the day.

Jamie said...


Thanks, I will add those to the focus list posted in the above post.

Jamie said...


A) The OR is almost 2 pts. wide and the early action is mid range.

B) If price moves to the R-zone from outside R-zone, I don't recommend to trade it because the R-zone is a consolidation zone. However, CELG didn't move into R-zone, it was always in it. If price moves into R-zone and consolidates in the R-zone, you can trade it, as a continuation play, but you have to give it time because you don't want to get stuck in the dead zone sideways action. Not sure if that is clear, CELG looked poised to BO of the R-zone. I would have scratched the trade if it had continued sideways. The inside bars imply price contraction ahead of expansion.

C) C&H handle at 50

PDT said...

Thanks for the responses.

I'm slowly getting it. Thanks!

Jamie said...


POT basing $84 on 15 min. timeframe. Looks ready to rip.

WP said...


You mention looking at both the 5 and 15 min charts. In your system setup, do you have both time periods up on the screen at the same time or do you toggle back and forth? Thanks for all the lessons.

Jamie said...


Both at the same time. I toggle between stock symbols, but I view the 1, 5, and 15 min. at the same time for each stock on the focus list.