Tuesday, September 12, 2006

Trade of the Day - New Century Financial Corporation (REIT) (Public, NYSE:NEW)

As per last night's watch list, I went long NEW on a break of resistance. I booked 50% of my profit as NEW approached my $40.00 target and I sold the balance into the close.

BRCM was a gap up play and a low risk entry. Notice that yesterday's high was just pennies under the OR low, so I felt comfortable in my long entry on the second 15 minute bar. BRCM had a lengthy consolidation before making its big move in the afternoon, but it was worth the wait. Exit into the close.

CYMI was a long on a consolidation range breakout. Exit into the close.

From best trade yesterday, AKAM came full circle today as my worst trade. Long on the break of the pre-market high and stopped out a few minutes later on a break of the pre-market low. I tried to short it in the afternoon but there were no shares available from my broker. I'm taking note of this now because if AKAM consolidates in the upper range of its last leg up, we could get a nice short squeeze on the next breakout.

7 comments:

ExEngineer said...

Congratulations!

What were your initial stops on these trades?

Jamie said...

Hi and thanks,
I usually set my stop just pennies below the low of the preceding 15 minute bar as I did today for NEW and CYMI. On BRCM I set my stop just below yesterday's high which was about 20 cents below my entry. AKAM was high risk because it had already had a big move so I set a tight stop just 5 cents below the pre-market low.

Glenn said...

I watched NEW this am and thought I should get in, Jamie probably is right bout now, but I passed. I am long AKAM from 40.30 for a swing, I want 10 points, what say you?

Jamie said...

Hey Glenn,

The breakout point of $42.00 should hold as support. However, if you look at the 60 minute timeframe you'll see that we have a steep trendline so you may want to set your stop just below today's low $42.65 to preserve profits just in case. As I mentioned in this post there are a lot of shorts so the potential for a short squeeze is good if we have a tight consolidation.

Glenn said...

Roger that. Thanks for your time!!

Dave said...

Jamie, on BCRM it seemed like it was a low volume gap with a lot of resistance overhead from a few days before. How did you decide it was a gap worth trading? It seems like there are gaps like this one everywhere that don't work out.

Jamie said...

Hi Dave,

Volume seemed slightly higher than usual, but you are right this was by no means a high volume gap up. However, the day before it carved out a bullish engulfing bar and I took a low risk long because I felt it would hold the OR low. One of the things I look for on my stockcharts.com is a black opening bar, this usually is followed by a gap fill. Often times several of my gap plays will follow this pattern and I know that the market is topped out. That did not happen yesterday, and most of my gap plays held their ground in the early action so it was a safe low risk entry. I wasen't targeting a big move, but I was delighted with what I got.