Monday, July 02, 2007

Dummy Trade of the Day - NVIDIA Corporation (Public, NASDAQ:NVDA) and Foster Wheeler Ltd. (Public, NASDAQ:FWLT)

NVDA gapped up with the market and set up a low risk dummy entry on a break of the ORH. It rallied and easily took out PP resistance and held it on the retest. Then it moved towards $43.00 at which point I took a partial. I was taken out on the balance with a tightened stop.

NVDA will likely attempt to test its all time highs shortly, so I am including the chart below with all of the PPs and S/R lines mapped out.



FWLT also gapped up with the market and after an early attempt to break the ORH that did not stick, it set up a low risk B&B entry at the base of the ORH. I took the dummy long entry which rallied nicely to the 25% Fibonacci extension of the previous day low to the ORH. As price fell back under 25%, I took a partial and tightened my stop allowing for a 38% retracement of the last leg up. Price retraced 38% and started moving up again. It tagged the round number $110.00 and immediately stalled. As it consolidated, I tightened my stop and was taken out at $109.75. After a deep retracement, FWLT set up another low risk entry and proceeded to rally almost up to the 62% extension. Unfortunately, the last rally was without me as I had moved on and did not get back to it in time.

6 comments:

x said...

"As price fell back under 25%, I took a partial and tightened my stop allowing for a 38% retracement of the last leg up."

Jamie, may I know on which bars do you set the Fibonacci for the last leg up for FWLT? THx

Jordan

Jamie said...

Jordan,

The low of the 1:00 bar which precedes the NRB trigger bar, is where the last leg begins. That level is 107.89. The swing high is 109.77, so a 38% retracement is in the area of 109.06, so I moved my stop to 109.00. The swing low came in at 109.07 so it worked perfectly.

Alex said...

Jamie, I thought I had a great setup in PNRA today. It looked great on the daily and intraday charts. I drew a daily pivot pt at the 45.90 level which was tapped several times on the intraday and happend to be todays ORL as well. I got short on the break of the 11:30 15min.bar. Everything looked great intially and then quickly reversed and got stopped out for a lose. What is your take on this? Always gratefull for your wisdom.

Jamie said...

Alex,

I always trail a stop 2 pennies above the last significant red bar on a short trade. PNRA took out support and reversed as bargain hunters stepped in carving out a huge bullish engulfing bar that completely wiped out that long red bar. In essence it was a bear trap. Next time this happens try to scratch the trade before it turns into a loss.

bl said...

Alex,
FWIW, this isn't a gap play that's probably why you got stopped out. Hard to tell which way the winds will blow. The 5/15 gravestone doji looks to have been a good short break. I would have passed on this one.

bl said...

Jamie,
NVDA can't ask for much more: ascending triangle/consolidation and break!