Thursday, June 28, 2007

Dummy Gapper Trade of the Day - Cisco Systems, Inc. (Public, NASDAQ:CSCO)

CSCO showed up on my IB pre-market scanner. It gapped up and formed a shallow rounded base on the 5 min. timeframe below, allowing for a relatively early entry. My entry and stop were based on the 5 minute timeframe but once in, I managed the trade from the 15 minute timeframe above. I move my stop 2 pennies below each WRB upon completion. I took a partial at the 38% extension and when that bar completed itself, it carved out a doji with along upper shadow, so again I moved the stop two pennies below the doji, in case of a sudden reversal. CSCO rallied further with another WRB and then managed to move up to the 50% Fibonacci extension of the previous day low to the ORH (same on both timeframes). The next bar started to print red and I closed my remaining position.


My second gapper trade, AUY, was from the briefing.com gapper list and set up as a typical Trader-X style trade. It took out the ORL when it was still too far from the 5 period ema and then proceeded to carve out a bearish flag. The last bar of the flag, attempted to regain the 5 MA but failed and printed a bearish doji with longer upper shadow. It closed below the 5 MA at the cusp of the ORL, signaling further downside and I entered short on the next bar. Pennies can be significant on these lower priced stocks so it is important to get a good entry and to plan the exit just above the extension so as not to chase to cover the trade.

14 comments:

bl said...

Jamie,
Nice trade on csco. Premkt vol list but big cap sleeper and cut it loose. Ya never know. Some premkt's missed: hoku vrnm irbt idev alvr sbux luv dsti amsc mlhr cof bbby smod driv lsi. Some momo, some nice early retracement shorts that bounced againt the 5ema on the 5min: bbby smod mlhr driv. BBBY 3/15" BBW 15/15". Good entries poor exits.

Jamie said...

BL,

Agree, I hardly ever trade lower priced bells such as CSCO MSFT INTC because a WRB on the daily is usually < $1.

Was also watching BBBY but missed the entry.

Bubs said...

Jamie great trades as usual. You always execute every trade as planned, good stuff.

Bubs

Babak said...

Jamie,
can you tell me more about this IB scan? thanks :-)

Jamie said...

Hey Babak,

The parameter is called "Hot contracts by Volume" and in pre-market I set the filter for > $10.00 and volume > 200,000. If it's a slow day I decrease the volume filter. It allows me to put together a short gapper list and review the charts before the market open.

Jamie said...

Thanks Bubs,

Execution = experience. After a while your eye develops a keen memory for what works and what doesn't.

Anonymous said...

Jamie, great trades despite the non-eventful day.

CSCO: you mentioned about support by 5EMA on 5 min chart. Do you also look at that to help time entry other than 5EMA on 15min?

I am curious as to how many trades do you take a day on average? And as you have a pool of watchlist, how do you decide which to go with if many of your alerts go off at the same time? I am asking this because when my alerts all go off at about the same time, I am at a loss as to which one to enter.

Thank you
YR

Anonymous said...

Is the 5th & 6th bar on 15 min chart for CSCO considered WR bars?

Jamie said...

YR

Yes, I use 5ema on 5 minute timeframe to help time the entry.

Average 3 trades per day. Sometimes only 1 and occasionally as high as 6-7.

I only set alerts for setups that I have reviewed the previous day. I give myself 5 minutes to assess the best plays on the open. I look to see how a stock opens in reference to its PP. If a stock gaps between two PP, I set it aside for a possible retracement trade later on. Today, the alerts for AMZN, AKAM, CAL, THE and a few others all went off on the open. I set AKAM aside and was able to enter long after a retracement with a target back up to the morning swing high.

I chose AMZN because it was the best positioned to move higher with such a small gap into a key PP area.

With experience I learned to set a manageable amount of alerts not to overwhelm myself.

I consider bar 6 on the CSCO chart to be WR. Not 5. On average 3-4 WRBs per trade. Some exceptions like HOKU earlier this week. Almost every bar was WR on that trade.

I believe the key is having a rigid set of criteria for each type of setup ie. B&B, PP, Retracement, etc. That way if a setup doesn't make the grade, you pass and move on to the next chart. Gappers usually take longer to develop and so you can review charts every 15 minutes as the day progresses. Sometimes a sleeper develops into a gem later in the session.

Jamie said...

YR,

I also like to use Trade_Ideas to monitor 15 minute OR breakouts. I load the watchlist stocks into TI software and it alerts me when OR is taken out either up or down. Missed a good short setup on CROX this morning.

OONR7 said...

King Jamie... excellent trades. Hope you don't mind the King reference, but as long as you keep executing like this you are considered royalty my friend. In any case, I like that you mentioned you bought CSCO on the 5-min but managed it from the 15. I do this from time to time especially when there's already some room between my breakeven and current price. Do you practice this method a lot?

Jamie said...

OONR7,

LOL, Flattered but still just a warrior in my mind.

Yes, I like to use the lower timeframe to fine tune the entry. Once the trade is safely underway, I often use the 15 minute to manage the trade.

Anonymous said...

Jamie, thank you so much for sharing!

YR

Jamie said...

Welcome YR