Wednesday, June 20, 2007

Dummy Gapper Trade of the Day - Matrix Service Company (Public, NASDAQ:MTRX)

As mentioned in the briefing list, MTRX was gapping down on weak guidance. I had my eye on it in pre-market as it cratered from yesterday's all time closing high. Shortly after the open it started trading in a very narrow range and I decided to place a sell stop order on a break of the $25.90. As you can see from the 3 min. timeframe, it fell very nicely and came within 15 cents of the 38% extension. I was stopped out for a gain of 1+ pts.

JCOM gapped up on momentum from yesterday's late day rally. It retraced and then carved out a NRB on support of the rising 5 period ema and I entered a dummy long on a break of the third bar high. It went up towards the 25% extension and started to consolidate again, so I was on guard for a potential reversal. It eventually took out the 25 % extension and I booked a partial profit. More sideways action through lunch and finally a doji star alerted me that it would not likely meet the 38% target, so I tightened the stop.

8 comments:

Anonymous said...

Hi Jamie,
Just wondering why you did not wait for opening range high to clear for JCOM before taking position? Thank you.

Jamie said...

Hi Anon,

For JCOM I wanted to get in as early as possible because of the big run up in price late yesterday afternoon. If a stock gaps up from a flatter base, I often wait for the break of the ORH.

apprentice said...

Hi Jamie,

Could you explain what is "a NRB on support of the rising 5 period ema" and "dummy"?

Thanks,

Jamie said...

Apprentice,

NRB stands for narrow range bar. 5 period ema is the pink line and in this case means the exponential moving average for 5-15 minute periods. In theory the ema provides support as long as it is not breached on a closing basis.

The dummy trade is a low risk entry from a NRB and was developed by MaoXian and is widely followed by many trader bloggers such as Trader Mike, Trader-X and others in my blog links on the side panel.

If you asking this question you are new to trading and I would suggest that you review the above mentioned blogs as well as this one for more examples on dummy trades.

Prospectus said...

Jamie,

Glad somebody made money on MTRX. I was long overnight for a position trade, and got a haircut X_X

Excellent trades as usual. Thanks for blogging!

Jamie said...

Prospectus,

Sorry to hear about your loss and not to rub dirt into your wound, but you're very cocky holding ahead of earnings ;)

Prospectus said...

Holy n00b attack, Batman! I never checked the earnings date! I'm not cocky, just made a different kind of "dummy" trade...

Jamie said...

Prospectus,

I know the feeling. In 2002, I was swing trading CLS for 1000 shares and they came out with an earnings warning. The next day the stock opened several dollars lower and I was devastated. I hope you were not holding a large position.