Wednesday, August 06, 2008

Gapper B&B - priceline.com Incorporated (Public, NASDAQ:PCLN)

This is a zoomed in view of the early action (1 minute time frame) on PCLN, an earnings gap (thanks to José for the zooming tip). I was hoping this would trade sideways a little longer because the 50 SMA was still very far away as price printed the third pivot into the base. The next two bars were narrow, the second of which was NR7, so I knew it was going to BO. I took the trade knowing the premature BO would likely not reach my target of $95.00 from the daily support.

Characteristics of this type of setup:

  1. 3 pivot point base;
  2. Lower highs off each pivot;
  3. Tight price/volume contraction just before the BO. Sometimes this last part occurs just above the base ie. mini base within the bigger B&B setup.
  4. If all of the MAs are in close alignment just above price, the setup is A+. PCLN did not meet this last requirement but still good for a fast trade.

I took half off as soon as price took out the previous bar high, so trail a stop two pennies above the previous completed bar. After that PCLN, formed a solid 2 PP base and I tightened my stop on the balance.

Keep PCLN on the WL for future weakness if it fails at $95.00. Today was a high volume gap and I don't think even Captain Kirk can save it now.

PACR is a good example of a bear flag right out of the gate. I missed the initial trade, but did manage another fast trade when it carved out 3 NRIBs with all of the MAs in perfect formation for a breakdown.

FWLT, another gapper, set up a 3PP base later in the session. I waited for price to consolidate the initial thrust. Turned into a big winner with a scalp trade into the close to sweeten the pot.

8 comments:

Anonymous said...

Jamie,

Excellent trading and even better postings & commentary.

I had a small window of opportunity today and caught a late day, explosive trade in FCX. It was similar to your FWLT trade, except that it was a high tight flag (1-min) that formed just above the morning high (DT). The volume contraction leading up to the BO was evident.

Jamie said...

Thanks Jim,

Trying to make the blog more user friendly. Ever since I removed anonymous comments, the number of emails has increased. I think there are a lot of new readers coming in and I have to explain the setups with that in mind.

Great flag formation on FCX. The FWLT flag was confusing because volume was all over the place, but I took it because this stock is long overdue for a rally. Also, I like that it finished strong on the day.

Day Tradr said...

I am a very happy person today. Not because I had a good trading day but because I found the PCLN setup that you traded at the same point but unfortunately by broker did not have PCLN for shorting. Glad I could spot a good trading opportunity.

Thank you Jamie for helping out so many traders. I have been benefited more from your blog than reading so many books on day trading strategies and setups.

Jamie said...

Thanks Day Tradr,

Yeah, it's always a big letdown when there are no shares available to short.

yr said...

Hi Jamie,
I've been busy with work lately and not keeping up with trading and your blog. But I found some time today to read and found that you've been showing alot more charts based on 1 min setups. Do you still look at 15min and 5min? Sorry if you've explained this before

YR

yr said...

Another question abt your re-entry for FWLT. Did the overhead downward-flat sloping 50SMA (green line) present any concern? Thanks

Jamie said...

YR,

Welcome back. I have four time frames on my screen for cross reference 1,5,15, and daily. I'm trying to explain the setups in a little more detail.

Jamie said...

YR,

In the middle of the day, it is a concern, but I disregarded it because of the time. I had a good feeling that FWLT would close strong as it had held up better than most of the other stocks I was watching.