Wednesday, August 20, 2008

Gapper Dummy Trade - Analog Devices (Public, NYSE:ADI)

ADI was a gapper short that I spotted on my TI scan - consolidation BO (two days) with high relative volume. The 15 min. chart is above and the 1 min. below. The point I want to make on the 1 minute, is when price tested the morning swing low, it carved out a mini C&H and reversed sharply. I took a partial here. Technically, we should trail a stop above previous 15 min. bar and tighten the stop only if the next bar prints a lower low. So that means when price consolidates or reverses ( ie. next 15 min. bar doesn't print a new low), you're stuck with a prayer. That's why I took a partial after the small gain. Those C&H patterns are powerful. As you can see from the chart, it was a full hour before price printed a new low.

When price stalled at daily support I closed the trade. With less than an hour to go, I didn't want to risk 20 cents to make 25. But, the 38% Fib. extension of the previous day high to the ORL was met and exceeded for those who were patient.

LEH was a NR B&B. This stock has been pummelled and looks ripe for reversal after today's double bottom.

It was do or die for RIMM today. After testing $125 support at the base of the daily trend line, it needed to make a move. The gap up was a good first clue and then it was just a matter of waiting for a tradable base.

CNQ is posted here for my memory. I shorted the build in crude inventories after it bounced from the initial reaction low, and later went long on a 3 PP B&B (NRIB on 15 min.). I read on that Warren Buffett and Bill Gates were spotted in Alberta checking out CNQ's Horizon Oil Sands development.


Formerly ADD Trader said...

Well it is good to see that I took the same trade as you Jamie, must mean I am back on the right track.

I took my partial a little lower, and closed it a little higher than you. It was a slow, grinding trade that always seemed like it could reverse at any moment. I originally was holding out for the Fib extension too, but I never thought it would make it through the daily support, from such a long drop. Just a reminder to myself to let the stock tell me how high or low it can go....!

Either way, good trade on an otherwise choppy day

Formerly ADD Trader

Formerly ADD Trader said...

That trade being ADI....!

P.S. Trader X, I know you are out there, becuase I saw your comments on the WSW blog recently. I know you are retired, but I would love to see a "one off" post on your site as to how your trading style has held up during this last year of extreme volitility, and if you have had to modify it at all.

Formerly ADD Trader