Monday, June 25, 2007

Trade of the Day - Hoku Scientific, Inc. (Public, NASDAQ:HOKU)

Another big day for HOKU. After retracing 38% (Fibonacci) of the last leg up on Friday, HOKU opened stronger and setup a nice long entry on a break of the ORH. I took a partial as price tagged the long-term pivot point and closed the balance at $11.50 as the stock printed two euphoric volume spikes on WRBs. We did not manage to close above the PP which is normal after euphoria has been reached, however, I'm sure that HOKU will retest today's high shortly.

THE opened with another downward thrust, but fell into support and reversed shortly thereafter, setting up a retracement trade. I was hoping we might get a little more mileage on this one after all that selling, but the markets weakened in the afternoon and THE followed suit.

15 comments:

Prospectus said...

Awesome trade on HOKU! I noticed it at about 1:00. What was your stop? Was the entry setup just an OR high break? Did you trail a stop up, or move it to breakeven?

I love the long-term pivots as targets. They work out really well.

Jamie said...

Thanks Prospectus,

I set my original stop 2 pennies below the previous 15 min. bar from my entry bar. I move my stop below each significant 15 min. bar. Therefore, I don't move stops after NRBs, inside bars or dojis. After the PP target was reached and the next 15 min. bar opened, I moved my stop to $11.00.

After that I was watching volume for clues of a top.

Some areas need more attention such as the retest of Thursday's high. But overall, HOKU was very orderly and easy to manage.

Andrew said...

Jamie,

i miss the huge move in fwlt per your watchlist lastnite. how come you didnt trade it? if you did, how would you have enter?

Jamie said...

Hi Andrew,

I was looking at FWLT this morning but I couldn't find a low risk entry and the volume was not inspiring. I wanted to get in as price broke Friday's late afternoon high and I had hoped that it might consolidate in a narrow range before breaking. On the 5 minute chart, you could have entered on the 6th bar. The 5th bar closed at resistance and then the 6th bar moved up from there. But the long upper shadow on the 5th bar was a sign of potential weakness.

On these pricey stocks I prefer to have a high quality setup before risking capital and this morning I just wasn't really motivated by FWLT.

Anonymous said...

Hi Jamie,
Great trades on a see-sawing day today.

For THE, was your entry at the opening of 5th bar or when the 5th bar cross the high of the 4th bar? Likewise, was your exit the bar close below 5 EMA or did you exit when the bar cross below the first red bar after hitting 38% fibonnaci?

Was your initial stop 2 pennies below 3rd bar low? and you moved your stop up as per your HOKU comments above? Was the nearby downward sloping 5 EMA a cause for concern?

Thank you,
YR

bl said...

Jamie,
hoku trade of the week. nice and fell in my lap, leaned over and it was gone. fwlt maybe a break of yesterdays late afternoon hi, 5/5"

OONR7 said...

wow... excellent trade. Were you concerned about the long upper tail on the first bar?

OONR7 said...

...I'm talking about HOKU.

Jamie said...

YR,

Thnaks,

The arrow on THE is hard to read but my entry was break of third bar high. My second exit was below previous bar low. I did not manage this trade as closely as the HOKU trade. I eventually moved the stop tp breakeven - after price recaptured the 5 ema. The biggest hurdle was crossing the 20 ema as there was a period of choppiness there. My original stop was two pennies below third bar low. THE was a pure technical trade. I had my lower PP mapped out on the chart ahead of time and when price tagged it and started to bounce, I knew there was an entry here. Look at the daily and you will see the PP line.

Jamie said...

BL,

Agree HOKU is trade of the week. Won't get many more like this - very momo. But keep it on the watchlist as it is not done yet. Going to $13.00!

Jamie said...

OONR7,
Like you, I also keep an eye on the 5 minute timeframe. HOKU set up was like a coiled spring (tight narrowing consolidation on declining volume) on the 5 and was less cause for concern.

Flatwallet said...

Can I be your apprentice? Nice trades Jamie.

Jamie said...

Flatwallet,

HOKU is like a gift in these summer doldrum trading days. No gifts today though. Had to work very hard to find two good setups.

Anonymous said...

Ahh, so your entry on THE was on the 4th bar as it breaks the 3rd bar high. In your opinion, would it be higher probability if you wait for the close of the 4th bar to confirm (higher close above 3rd bar)? When do we take a trade as long as it cross high or low and when we wait for the close to confirm?

Did you move your stop loss anymore after moving it to breakeven? As you said, there was some choppiness around 20 EMA, did you tighten your stop around there?

Thank you,
YR

Jamie said...

YR,

Yes, you can wait for the bar to close as a second level confirmation. My confirmation was a hammer reversal bar on PP support. Once price took out the high of the hammer, it served as confirmation. Remember, this is a technical bounce from an oversold level. The first bounce is the the only tradable bounce IMO. Today, THE fell again on the open but I ignored it. You can take a trade when it takes out the previous bar high if you have a strong reversal candle such a hammer at a PP, otherwise, its probably best to wait for closure above the previous bar.

I did tighten the stop when the stock got very choppy at 20 EMA. I tighten stops more vigorously on steep slopes as opposed to slower slopes. On this type of trade, you need to give it a little room to consolidate every now and again.