Thursday, September 28, 2006

Trade of the Day - Energy Conversion Devices, Inc. (Public, NASDAQ:ENER)

Both of last night's watch list picks were invalidated by analyst interference: AMD was downgraded by ThinkEquity to sell from buy and upgraded by Caris to Above Average from Avg.; AMGN was initiated as Underperform by Credit Suisse and FBR was concerned about negative headwinds. Both stocks gapped down too much, thus invalidating my setups.

With no other plan in mind, I decided to look for a good gapper play. ENER was up on good volume in the pre-market on news of an Intel deal. I placed an out of the money order just above $35.00 in pre-market, but unfortunately it was too low and did not get filled. It posted a red candle in the opening range, so I decided to wait for a better setup. In the meantime, I ran some scans, but ENER clearly had the type of volume I look for on a gap up play. I waited for a low risk setup which finally came after lunch. It tagged the rising 10 period EMA carving out a NR doji. As soon as price took out the high of the doji, I went long. I booked 50% of my profit as price approached resistance. ENER consolidated for close to an hour before spiking higher into the finish. Having closed above resistance on the daily timeframe, I'm optimistic for some further upside and will be watching ENER closely.

2 comments:

redbridgecapital said...

I was wondering why given the run up into the close you still closed out the EVER position. I bought around the same time you did and held 100% into the close, I hope Iam not screwed.

Jamie said...

Hi RBC,

No, you're not screwed. I have ENER on the watch list as a bullish setup for tomorrow. I love this stock. Once it gets going, it can be a real momentum play. It closed on its highs today and that usually bodes well for continuation.

Good luck with it!