Wednesday, August 11, 2010

Day Trade Bear Flag - SanDisk Corporation (Public, NASDAQ:SNDK); Darvas Box - Apple Inc. (Public, NASDAQ:AAPL)

SNDK carved out a bear flag in the first hour of trade. The daily support level was $42.40 as depicted on chart above, so just partial at full extension of the flag pattern. Exit balance at daily support target. The best way to trade this type of pattern is waiting for the downsloping 5 period EMA is reasonably close to price.

Last week, we posted the daily chart of AAPL and said that the stock was coiling inside the Darvas Box and that we were expecting an explosive move when the box broke. Unfortunately, today's BO isn't about AAPL, it's about fear re: Fed policy. So, in a way, it delegitimizes the original plan. I'm just day-trading this BO. Not sure the explosive move is going to last more than a couple of days.

Ambush setup - short break of third bar low. The third bar breached the ambush zone by a couple of pennies.

Both SNDK and AAPL trading lower in after hours following Cisco earnings.

Swing Trade - AGU Long - Scaling into a long position in the ambush zone of the last leg up. Scaling is the operative word. I'm prepared to average down.


jordan said...

Hi Jamie,
Thks for your reply on my previous qn abt your ambush trade. I have another qn which i hope doesn't sound too silly to u. When do u place the fib from PDL to PDH vs PDL to current day swing high vs current day swing high to swing low?

Jamie said...

Hi Jordan,

Good question. I place my fibs from PDH-PDL when price opens within the previous day's trading range. Use PDH/L to current day ORH/L when stocks gap above/below previous day's range and immediately start to fade. Use current day swing high/low for runaway gaps like we had on Wednesday ie. wide gaps with little attempt to fade. I usually move my fibs to current days range in the afternoon looking for ambush setups.

jordan said...

Thanks so much for clarifying.