Trade of the Day - International Business Machines Corp. (Public, NYSE:IBM)

The first chart is the daily and the second is the 5 minute timeframe. IBM was a watch list stock which was showing signs of fatigued. At the end of May it carved out a lower high. This week we had a hanging man on Monday which was confirmed yesterday. I set an alert for IBM on a break of the blue lines. The one caveat was the proximity of the 20 day EMA (green MA -marked by red support line). That's the problem shorting strong stocks, one never knows which level of support is going to provide a bounce.

My other problem this morning is that all of my alerts went off in unison, so it was a bit of a challenge sorting through all of the setups. IBM was one of my favorites, even though I missed the ideal entry (break of red line), I took a low risk short as price broke $104.50. I took a partial after 1 pt. and tightened the stop to the minor PP marked by the thin blue line. I covered the balance as it appeared the market might end the day with a rally, however, the rally was short lived and we closed on weakness.

Trade of the Day - Valero Energy Corporation (Public, NYSE:VLO)

When VLO tried to challenge its morning high, it failed and carved out a doji reversal bar with a long upper shadow. I shorted VLO as price fell below the low of the doji stick. I placed my stop 5 cents above the star prior to the doji because the doji was too wide. I took a partial when my preliminary pivot point target was met. The next target is gap support and I suspect it will reach that target tomorrow. It should bounce either at gap open or gap close. At the moment gap close lines up with the 200 MA.

Dummy Trade of the Day - Apple Inc. (Public, NASDAQ:AAPL)

AAPL finally set up a low risk short entry on a breach of the ORL this afternoon. This was an easy trade to manage because the bears finally got aggressive with AAPL. I just kept moving my stop 5 cents above the previous bar high until it capitulated at $106.50. I covered at $1o6.80 for an even 2 pt. gain. My risk was $0.40 which results in a 5R gain. Sweet!

My first long entry on AMGN failed after taking out the morning high so I exited my full position. My second entry this afternoon had a longer basing period and a strong finish into the close which could bode well for a follow-up trade tomorrow.

Watch List - (NASDAQ: AMZN), (NYSE:CAL)

AMZN still looks bullish as it sets up a base and break pattern on a break of the swing high at $63.84. Friday's volume was not enough to push price beyond the retest area.

My entry was on a break of the pivot point. I traded AMZN on the 1 minute chart using a scale in approach to minimize risk. Long on break of $62.60 and added more as price held and bounced from the initial entry level.

I was stopped out with a nice profit as depicted on the 15 minute timeframe below.

CAL looks weak as it rallies on declining volume. I will be looking to short a breach of the trendline and I expect CAL to retest the 200 MA.

Dummy Trade of the Day - Transaction Systems Arch. (Public, NASDAQ:TSAI)

TSAI was a gap fade from last Friday that I found through one of my scans. I liked the way it traded and added to my list of momo stocks. The first chart is the wide range view of the action over the last few days. I noticed that my original entry point from last week was being tagged as support on a daily basis and set an alert so that I could short an eventual failure.

The second chart is the daily timeframe.

The third chart is my dummy short of TSAI on a breach of support. Notice how orderly the trade was - no overlapping candlestick bodies and hardly any wicks. At first the trade was slow and steady, but when price fell below $30.00 things started to really pick up and then the stock just went parabolic. Notice that volume increases in proportion to the size of the candlesticks. At $28.50 the stock capitulated on a huge volume spike. All those people that were still holding after last week's gap down, in the hopes of recovering some of their investment, finally gave in, the pain was just t0o much.

Trade of the Day - NASDAQ 100 Trust Shares (ETF) (Public, NASDAQ:QQQQ)

As mentioned last night, this last breakout felt like a bull trap. This morning I felt even more strongly about it and so I shorted the Qs on a break of the pre-market low. My original stop was the pre-market high. As you can see from the chart, by 10:30, I was comfortably able to move my stop to breakeven. I covered into the close.



ICE managed to stay within yesterday's range until mid-afternoon when it swooned down for a test of yesterday's low at $127.50. It quickly pivoted from that point and started to rally so I took a scalp trade as price crossed back above $128.00. As price moved above $129.50, I tightened my stop to $129.00. It briefly crossed $130.00 and started coming back in fast, so I decided to book my profit at $129.50 rather than hold into the close.

Trade of the Day - IntercontinentalExchange, Inc. (Public, NYSE:ICE)

Only one trade for me today as I was very busy at work. ICE was not a great setup, but it did generate a profit despite the low risk: reward ratio. I was hoping for a late day rally but it never got off the ground because the market tuned very bearish in the afternoon.

Jim wrote to me about GROW yesterday and I told him that I was no longer bullish on GROW because of the bearish pennant formation on the daily timeframe and advised him to sell. Hope he was able to get out on the open. A bear's dream setup came midday. I didn't get in on this one but it was sweet for those who did.

Opening Gap Fade - Continental Airlines (NYSE:CAL) and NASDAQ 100 Trust Shares (ETF) (NASDAQ:QQQQ)

I shorted the Qs on the open because despite bullish retail sales there was nothing compelling enough in the Briefing.com news to push price beyond the intraday pivot point (black arrows on the chart). The entry was low risk because my stop was set just pennies above the pre-market high.

A few of you asked what conditions made me fade the Qs. The primary things that struck me this morning are outlined above. The pivot points are especially compelling and they are used by many floor traders (follow the herd). The rest is feel and that comes with experience.

I shorted CAL as soon as the third 5 minute bar took out the low of the second bar. I set my initial stop at $46.50 because I expected CAL to be much more volatile and because there is no real intraday resistance at the opening price level. The trade started out nicely, but shortly thereafter buyers stepped in and I felt I might me stopped out. Trading the open is extremely volatile, however, I had a strong conviction about my short and resisted tightening my stop. I covered 50% of my position when price tagged $45.00 for the second time, and moved my stop to breakeven. I was very happy to cover the balance at $44.25 and be done with this choppy ride.

These are 5 minute charts.

P.S. A broken tooth at breakfast and emergency dental appointment scheduled for 11:30 kept me from work this morning. It also meant that the usual gapper scans would not fit into my trading day very well. So maybe that's the real reason why I was so aggresive on the open today.

Dummy Trade of the Day - Marvell Technology Group Ltd. (Public, NASDAQ:MRVL)

MRVL showed up on my gapper scan. A quick look at the daily timeframe showed that yesterday's bar was an NR7 so I went long on a break of resistance on the fourth bar and an uptick in volume. MRVL then stalled as it retested former resistance but managed to hold as support. It progressed in an orderly fashion for the better part of the day. In mid afternoon it attempted to take out the midday resistance but failed and that's when I took my exit.

GES was a low risk dummy entry looking for an extension of yesterday's big move. As you can see from the chart, it gave a good try but in the end it failed and I was stopped out for a tiny profit.

BSX was another gapper from my scan. I was looking for the elusive midday momo move, but it rallied up to the morning high and came right back in. I was anticipating this and I set a tight stop. Good for 17 cents.

AKAM was a low risk short entry. My target was the morning support area and I was happy to cover as soon as I saw that support was going to hold.

Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

The first chart is a wide range view of CAL over the last few weeks. The blue lines are key support and resistance levels. Of course, when support is broken, it becomes resistance. So yesterday's support is today's resistance.

The second chart is a closer view of the same 15 minute timeframe. CAL gapped down on the open and quickly fell towards the gap open support level dating back to November 15th. The next bar signaled indecision and the third bar moved slightly higher. Volume on the second and third bars was very bullish, so I took a low risk, long entry as the fourth bar opened up. My target was a gap fill. As soon as price tagged the downsloping 20 period EMA, I took my profit.

I shorted CAL on a lower high about an hour later. Midday it formed a perfect hammer, signaling a potential reversal. I immediately, tightened my stop to breakeven just in case and I was stopped out on the next bar. I waited to see if another long entry would setup, but decided to call it a day when the stock came into a third wave of weakness. The chop chop game is a no win situation when it comes to trading.

Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

The markets have been overbought for quite some time and today was the day for some major profit taking. There was no real catalyst going into the session, but the first few bars were very persuasive. I noticed that all of the recent momo stocks were getting beat up pretty bad, so I took my biggest winner on the month and started stalking it for a low risk, short entry. I should have probably shorted it just before it broke through $44.00 as it would have been easier, but I managed to short at $43.85 with an initial stop at $44.25. I missed my planned exit near $42.00, so I covered on a minor bounce at $42.35. Notice how the selling took place on relatively high volume throughout most of the day, compared to the low volume accompanying the mid afternoon bounce.

Trade of the Day - Yahoo! Inc. (Public, NASDAQ:YHOO)

YHOO gapped up on the open but quickly reversed course as sellers took over on heavy volume following last night's dismal earnings report. I took a short position on a break of the OR low and covered as soon as price reached $23.00.

I noticed that X was testing its trendline just as I was about to go for lunch, so I stuck around and took a short position. My preliminary target was yesterday's low, followed by a gap fill to Friday's close (both of these targets are mapped out by the blue lines). I covered 50% of my position about 10 cents below my first target and held the balance hoping to reach my second target. I covered the balance of my position when it appeared that X might rally into the close.