Tuesday, July 03, 2007

Dummy Gapper Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

CAL is one of my usual suspects. It's been on my watch list since it gapped up in Nov. 2006 and has been one of my favorites since then. I saw it trading in pre-market and decided to add it to my short list of focus stocks on the open. It opened with a WRB and consolidated the gap in the top half of the wide OR bar, making consecutive higher lows. It looked like a WOR Base and break setup. I entered a dummy long as price took out the fourth bar high (stop below 4th bar) and took a partial at the 38%Fibonacci extension of the previous day low to the ORH. After closing above the 50% extension, it started printing red, so I closed the balance.

9 comments:

bidmarket said...

Jamie,
Would ACH qualify as a b&b pattern? and if so, where would you have went long assuming that it had not retraced more than 38% which it did?
thank you
bid

bidmarket said...

sorry, ACH on the 15 min

Jamie said...

Bidmarket,

I calculate the the 38% retracement from the last leg up, so after the OR, ACH did not retrace 38% of the previous day low to the ORH. ACH B&B above $46.75 but because it was so close to ORH, you could have waited.

First consolidation did not retrace more than 38% of move from 5th bar low to 9th bar high, so stay in the trade.

Hope you traded this as it was a beauty.

bidmarket said...

i got it on the 7th bar.

why a b&b above 46.75. is it because the 3rd and 4th bars had the same low? i assume you draw a horizontal line at the low of both of these bars and one at the high of both of these bars?????????

thank you!
bid

Jamie said...

Bid,

On the 5 min. timframe it tagged that number three times and then broke above it. But don't need the B&B if you trade off of 15 min. as this setup was pretty clean.

Anonymous said...

Jamie,
Would it be advisable to enter at 4th bar as it breaks the ORH?

YR

Jamie said...

YR,

As a general rule, if the bar is almost complete ie. near the end of the 15 minutes, I usually wait for a close above, especially, if price is moving slowly. If price and volume are expanding quickly, I will take the trade as price breaks the ORH.

bidmarket said...

with respect to CAL and YR's question, how important is it to you the type of candle that it forms as it breaks the ORH or as long as it closes above the ORH that is good enough?
bid

Jamie said...

Bid,

Ideally, I prefer a bullish green candle with little or no upper shadow. However, sometimes I enter before it completes itself, so the open of the next candle becomes key and I look for continuation.