Thursday, October 12, 2006

Dummy Trade of the Day - BE Aerospace, Inc. (Public, NASDAQ:BEAV)

I got so many hits when I ran my gapper scan, that it took me quite a while to narrow my selection. I finally took a chance on BEAV, but only after it had taken out its OR high following a NRB. I took 50% of my profit after a 1 pt. gain and decided to let the rest go as price came into $24.00 because I noticed that volume was diminishing.


Anonymous said...

Hi Jamie,
I noticed on the daily chart there is a 200 day MA @ 20.1 for BEAV. Are such longer term MA of any concern to you when you enter a day trade? Did you also use Fib ext to determine exit in this case?

I was watching PII as it gapped down. But it reversed strongly. In your opinion, how would you have entered & exit on this trade on a fade the gap move?

Many thanks for your sharing & learnt much from your blog.

Jamie said...

Hi Anonymous,

First, thanks for the compliment. Second, great questions.
Third, I'm not sure I can answer all of your questions adequately through this comments section, so I'll just touch briefly on the BEAV trade here and do a post on PII tomorrow.

Yes, I do look at the daily timeframe before I take an intraday position. The slope of the moving averages on the daily timeframe is key. In the case of BEAV the 200 MA is fairly flat and less of a concern. Also, all of the MA's are close together and appear to be setting up for a crossover. I had the same type of situation when I traded the first gap up on X - U.S. Steel last week. A downsloping MA will pose a much stronger degree of resistance than a flat slope.

Do I use Fibonacci extensions in my exit strategy? Yes, along with resistance levels from the daily timeframe. The thing I liked best about the BEAV trade was the fact that the real bodies of the candlesticks did not overlap throughout the ascent. The beginning and end of each stick is very important. So I try to watch the changover from one candle to the next at each 15 minute interval very closely. The other determining factor in my exit strategy is volume.

The PII trade was a technical bounce off of the 50 MA (daily timeframe) which lined up fairly evenly with notable support. It was high risk, but the reward was huge. More on this one later.