Friday, February 06, 2009

MA - Pivot holds as support - 3rd test of pivot support is the charm.

V - ORBO followed by 3 tests of the base.

HIG - original short was scratched. Eventually carved out a solid B&B at the half dollar level.

13 comments:

PDT said...

Hi Jame, this is unrelated to these charts but I figured I would ask anyway.

I mostly use stop-lmt orders to enter my trades. Which is the preferred trigger method (ie Bid/Ask, Double Bid/Ask, Last, Double Last, etc)? What the the differences?

Thanks in advance

Susan said...

Jamie,

Where did you set your stop loss in the V trade?

"MA - Pivot holds as support - 3rd test of pivot support is the charm."

I took the short trade in MA in the early session. I was thinking on entering a short again on the break of the 3PP. If the 3rd test of support holds, is there a high chance of reversal? Had MA broken the 3 PP level on a closing basis, would it had been a good place to enter short?

Have a nice weekend!

Susan

Jamie said...

PDT,

I only use stop limit in after hours trade or stocks with wide spreads. So, I'm only using them when I have to. I normally use stop orders and generally get good fills. Sorry, I don't know the answer to your question.

Jamie said...

Susan,

Normally the stop is set at previous bar low, but on lower timeframes, I use support levels. The ORBO trades have to move in my direction right away, otherwise, it's a failed BO and I'd rather scratch than wait to be stopped. On the second trade, I placed stop below the lows of the base.

For strong uptrending stocks, most of the breaches of pivots are head fakes. You don't want to be shorting these unless they break and fail the retest - usually forms an angle and can't regain the 50 MA. These are good long opps - back up to prior resistance. Especially when they set up near whole numbers or 1/2 dollar levels.

PDT said...

Are you guys saying the 3rd test of $156.50 or $157?

It looks like the $157 mark is more of a pivot level and its breached at 12:51 indicating a possible short entry. Obviously for the reasons mentioned above the short would be a bad choice though.

Jamie said...

PDT,

$156.50. That was the swing high around noon yesterday and was retested as support yesterday afternoon. It was tested again twice today.

Trader M.D. said...

PDT,

I'd normally use STOPLIMIT-LAST orders. This way the price actually has to trade above the actual number you set as your stop in your stop limit. I've gotten some triggers in the past using things other than the last (bid, ask).

You may want to experiment with it a bit and see what works best for you/best for the broker you have.

QQQBall said...

MA = channel surfing at its best.

PDT said...

Thanks MD. I am using IB as my broker. I see your points on using last as opposed to bid/ask. Do you think double last is appropriate at all?

Also, why do you think the default is the double bid/ask method?

Thanks

john said...

Jamie, Congrats on the MA trade.

I still don't understand the argument for going long - at least not before it had gotten back above $158.25. And since it worked - I must be missing something.

I understand it is in an uptrend, but post V earnings, it had gotten extended and with the stock having failed in the morning at its early Jan high and its setting-up with lower highs and more frequent lows, I would have been more inclined to the short side.

What am I missing?

TIA

Jamie said...

John,

You can wait for the BO of the base at $158.25. I'm used to this setup, so I like to get in earlier. I've observed this pattern many times on strong trending days. Strong gappers tend to trade in a range after the intial gap. So you can profit from trading inside the range. Usually the best opp. happens on day 2 following the initial gap. Days 3, 4, ... tend to get narrower so the opps are less obvious and often times not worth the effort.

I often observe head fakes lower and then the stocks move back into the range and rally. Either way, there's a trade there. If the market had suddenly turned very weak, I wouldn't have bothered. But MA was already down 7 points from the highs of the day, and the chances of it going lower in such a strong trending market were limited.

Strong gappers in either direction often have secondary trades on day 2 following the gap and that's why I often focus on them.

john said...

Thanks for taking the time to expand on your observations. I'm sure that a lack of respect for up-trending days has lead me to trade the wrong side of those head fakes on more than one occasion.

Jamie said...

Yeah, me too and those head fakes can be brutal if the stop isn't in place.