Friday, August 01, 2008

Gapper Dummy Trades - Biogen Idec Inc. (Public, NASDAQ:BIIB); Elan Corporation, plc (ADR) (Public, NYSE:ELN)

BIIB and ELN were mentioned last night in the NASDAQ Technical Picture post on news of the Tysabri patients. BIIB carved out a very subtle bear flag as price and the down sloping 5 period ema came together. The trade was choppy at times so I took a partial at $51.00 and closed at the psychological round $ number $50.00.

After attempting a fade, ELN settled back in under the 5 period EMA with some NRBs (NR7) and I shorted on the break of the base at $10.96. Exit at psychological $ dollar level $10.00 on a huge volume spike. Hard to believe that ELN was trading at $34.00 just four days ago.

BOOM was an intraday PP base & break. Took a partial as price approached the whole $ number and was stopped out a short while later.

4 comments:

Day Tradr said...

Jamie,

Do you take into account the 50c and whole numbers when entering a trade? What I mean is - suppose a consolidation is ready to breakout at $xx.40 or $xx.80 - $xx.90, where would you go long?

Jamie said...

Day Tradr,

The main thing is to respect your pivot points and trend lines and not try and anticipate a move before it happens. I usually set my buy/sell stop order 1 or 2 cents above/below the pivot point depending on the price of the stock.

If a stock has a pivot point at $21.93 and you want to short, it's probably not a good idea to try and anticipate by getting in at $22.00 because the whole number attracts buyers and the entry might never actually trigger.

A good BO breaks wide, consolidates briefly and then continues. If the stock breaks, stalls and acts very sluggish because of lack of volume, you want to keep it on a short leash. No need to take a loss, if it gives you time to scratch. I do allow for a retest of the base, but the retest should be brief and on lower volume than the BO.

The most recent pivot points are the most important. If a stock has a reaction high of 22.15 early in the session and then a few hours later forms a 3 PP base to go long at $22.00, then I set my buy stop order at $22.01-22.02

bl said...

Jamie, Nice on BIIB. I did the opposite. I thought heck this stock is going to fade and put in a buy stop at the or high 53.50, triopped it, reversed at .52 and took a loss. Lesson: look at the LT spt and rst points. In this case 53.65 in Nov07; 10/15" hits the 5ema to short. WFR acted similarly last week

Jamie said...

BL,

Think it may bounce soon. Keep it on the WL.