Tuesday, August 26, 2008

Gapper Dummy Trade - Sanderson Farms, Inc. (Public, NASDAQ:SAFM)

SAFM gapped wide on the open and immediately filled the gap. The key to the setup was a lower high , plus the fact that there was very little support beyond the 3rd and 4th bar lows. As you can see on the 5 minute chart below, once support was taken out, it was a fast swoon down to the ORL.

FLS showed up on my NR7 scan of the usual suspects. After a multi pt. move lower, FLS carved out a V bottom setting up a long entry. Capitulation at the round number $125.00, followed by a V bottom (hammer reversal bar on 15 min.) and huge volume on the reversal. Sweet.

11 comments:

QQQBall said...

nice qucik trade. smart to take partials on that high volume candle, particularly after the quick opening gap fill.

Am I Bald? said...

Jamie,

Great trades today. I just recently signed up for Trade Ideas and am trying to use the NR7 scan. Do you have quite a bit of luck with it? Right now, and maybe because I am new to it, I get a little overwhelmed with the amount of information they give me. I have been trying to narrow down my search, so hopefully you will see some good trades on my blog one day soon.

Tyler

Jamie said...

QQQBall,

Thanks, I was tempted to close it all, but luckily the ORL held as resistance.

Jamie said...

Tyler,

I use NR7 to scan my watchlist. That's how I found FLS. If your WL is 50-75 stocks or less, this scan is relatively easy to manage. The other NR7 scans I use are gap down 1% and gap up 1%. I use min. price of $15.00 and min. daily volume of 150,000.

The pre-market scans I use are the pre-configured gapper scans in Trade Ideas. That's where I found SAFM. I just add a min. price to their configuration.

Jamie said...

Tyler,

MDT from your NR7 scan yesterday was very nice.

bl said...

Nice, and add a bunch of food types: ppc sda tsn

bl said...

And, yes my TI premkt scan had SAFM. My scan: +/-4% >2k >$2

Am I Bald? said...

Jamie,

Thanks for the information. I did not know that I could have Trade Ideas scan my own watchlist. I will work on setting that up.

Thanks,
Tyler

Jamie said...

BL,

If I understand correctly, you're scanning for stocks that gap > 4%. I guess that means a nice short list of gappers. Easier to manage.

yr said...

Jamie,
On SAFM trade, the support at 3rd & 4th bar seems quite close from your entry. That together with somewhat bullish WR 1st bar...would like to understand what was going through your mind when you made the decision to take this trade? Was the lower volume on pullback a clue there is more downside room? Thanks

YR

Jamie said...

YR,

Just enough room to change my mind. I was a little rushed when I wrote the post, but notice that volume increases on the initial pullback after the gap fill of the opening range. Volume contracts on the next attempt to rally and the trigger bar is bearish engulfing on an uptick in volume. Plus, I thought that the huge earnings miss had to be reflected in the stock price.