Sunday, June 24, 2007

Dummy Trade of the Day - TODCO (Public, NYSE:THE)

THE was a watchlist stock setting up for a break to the downside. It took longer than anticipated, but when it finally gapped slightly lower on Friday, I watched it carefully as it set up a low risk dummy short on a break of the ORL. It had a great risk:reward ratio of 1:10.

TASR set up a nice gapper dummy long after carving out a perfect hammer reversal bar followed by a low risk base and break. However, shortly after breaking out it printed a doji evening star like reversal, so I took the first opportunity to scratch the trade. Similar setups in the recent past have worked very nicely but TASR just traded sideways. Cross reference the charts for RS and OSG.

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