Friday, August 25, 2006

Trade of the Day - Research in Motion NASDAQ (RIMM)

Just before leaving for work, I read something on Briefing.com regarding increased handset expectations and decided to place a buy stop order above the pre-market high. This news was the cherry on the cake so to speak, because yesterday RIMM had a strong finish and I was planning to watch carefully for a strong open. I locked in 50% profit at the 10:00 - 10:15 reversal time and exited the balance as RIMM failed to take out $83.00 on the third attempt. Volume was thinning out and it couldn't even manage a gap fill at $83.06 (April 6th).

This AAPL trade is an example of a low volatility breakout (referred to as the squeeze by John Carter). Notice how volume drys up midday as the stock trades in a very narrow range. It forms a shallow base and as price approaches resistance volume starts to perk up. I used a buy stop limit order on the entry just above $68.31. My target was a retest of the morning high at which point I locked in 50%. When price backed off of the $69.00, it was time to think about closing the position.

2 comments:

AC Investor Blog said...

Hi Jamie !!

Take a look at LRCX : On friday afternoon’s the stock breakdown through the support at $40 seemingly put the sellers in further control of the trend and that is why it made sense to favor the short side. During this week the stock headed back up to the descending trendline and have failed the breakout, volume is increasing in the downdays. Keep in mind that the stock is trading in a downtrend, RSI is again in the Beraish area and an important point was that the DMA50 line already crossed DMA200.

AC

Jamie said...

Thanks AC!

I'm going to add LRCX back onto my watch list. It finally looks like it is ready do something here.