Monday, August 04, 2008

Cup & Handle - UltraShort Oil & Gas ProShares (Public, AMEX:DUG); DryShips Inc. (Public, NASDAQ:DRYS)

DUG - Ultrashort Oil & Gas set up a perfect C&H base and break.

Characteristics of C&H pattern -

  1. Handle should be shallow - preference to patterns that retrace 38% or less;
  2. Handle - price and volume contraction as handle develops;
  3. BO - Price and volume expansion on the BO. No need for a retest. If the handle is properly formed, price and volume should expand quickly on the BO. That's not to say that you should scratch the patterns that retest. It just means that a well formed handle has had plenty of time to consolidate, so no real need to consolidate after the BO.
  4. Expected Measured Move - 100% from the low of the cup to the base of the handle.
Read more on C&H - VMW

DRYS - I traded this one as an inverse C&H pattern. Took a partial on a huge volume spike and held balance to target - (100% Fib. extension of the ORH to the base).

JOYG another play on lower oil. Missed the initial BO, but couldn't resist this NRIB (NR7).

Plus a bonus scalp into the close.


Unknown said...

Nice trade on the DRYS!! - I took it for a ride as well

TJ said...

Thanks HIDT,

Been waiting a while for DRYS to decide which way it was going.

Rick said...

I took the same DRYS trade as well. I exited too quick at 69, but I wasn't expecting energy stocks to be so linear while the market was chopping around so much. I almost shorted POT too but there wasn't enough volume contraction in the morning bear flag.

TJ said...


I almost shorted AGU. It's hard to catch all the moves when everything starts to break around the same time. I wasn't expecting so much action on a Monday.

PDT said...

Hey Jamie,
Where was your initial stop the JOYG scalp? Was it the previous high ~61.51?

I also see you choose to enter on a break of the $66.20 base, but what about the $66.30 base?

Thanks for your input!

TJ said...

Hey PDT,

I used the NRIB as my stop. If you look at 1 minute chart, you'll see B&B set up. No reason to have stop higher than 20 EMA/1 min.

No consolidation at $66.30. These scalp trades work best when you enter on consolidation BO. Look at 1 minute chart and see NRIB just above 66.20. Also $66.20 was base long at 2:19 EST on mini C&H. So real base in my mind is $66.20.