Thursday, September 25, 2008

Intraday Support & Resistance - DryShips Inc. (Public, NASDAQ:DRYS)

DRYS gapped down and set up a low risk short at $42.50 (3PP base on 1 min.). My target was $40.00 as I didn't see much in the way of support on the daily. I was expecting 3 WRBs on 15 min. chart but it got off to a slow start. I decided to take a partial after 1 pt. because of lack of momentum. I let it go after it became obvious that DRYS was forming a base to reverse.

Price retested the BO point and traded sideways in a tight narrow range (price/volume contraction ahead of expansion). I took it long on the break above the base. Partial as price approaches the ORH and exit balance as price approaches the gap fill. Sweet!

The blue lines are intraday support/resistance or pivots. The uppermost line represents a gap fill. These lines help guide my trading.


SQNM - Yesterday's wide base at $26.00 held as support today. Don't try to catch a falling knife, wait for a suitable entry point. I entered long at $26.20 and exited as price approached $27.00.

ABX held support and I entered long for a retracement trade. If you look at the 1 min. chart, you'll see a H&S top just as price set up that morning swoon into support. Wish I had caught that move.

5 comments:

Day Tradr said...

Jamie,

Glad to see you traded DRYS and SQNM too. I entered DRYS at 42.55. Exited partial at 43.5 but exited the remaining at 43.20 when it formed a bearish candle on 5 min. chart. I was too fast to exit because it made a good move after that.

I also had SQNM on my WL. Learnt this from you to keep an eye on the last couple of days momentum stocks. I however went short.

I see a lot of support and resistance lines on your charts. When do you draw these lines - just before entering the trade or as you go thru. the charts on your WL?

Day Tradr

Jamie said...

DayTradr,

DRYS same first half. When price hits a resistance zone, expect a wider/longer consolidation. That's what happened after price reached $43.50. I usually look for a 38% Fib retracement from low preceding the BO.

DRYS trading at lows not tested since 2007 today, so these lines are drawn in as the day develops. You can always draw lines at ORH/L and move from there. Once price breaks out of base, the ORH and gap fill become 1st and 2nd level targets.

I draw in lines for WL stocks on a regular basis and set alerts. For example ABX has a 3PP base on 15 min. chart. Closes on the base and a wide gap to be filled, so that will be on the focus list for tomorrow along with RIMM - wide earnings gap at daily support $80.00

Rick said...

Nice DRYS trade. I was looking at it but I was hoping for a cup and handle. USO was also forming a messy cup and handle at the time, which was more evidence the trade would work. Since the short sell rule, it seems like the patterns are there but harder to see and not quite as clean. I have a new appreciation for program trading (looks like most have been turned off this week).

Jamie said...

Thanks Rick,

Trading has been compromised. A large number of my WL names, excluding financials, are no longer shortable. Even when they are indicated shortable, there are glitches and delays in execution. AMZN C&H today - not well formed, failed at the midway mark. Could of had a nice short, but AMZN not readily available for shorting. I don't want to sound like a whiner, but this is getting to be more and more challenging each day since the ban.

Rick said...

I think the SEC should lift the ban on October 2nd--it clearly isn't helping anyway. As far as I know, the SEC hasn't issued an updated list of stocks that are now banned, but I found a list of unconfirmed stocks here: http://blog.rebeltraders.net/2008/09/22/updated-short-selling-ban-list/

Somehow ESRX ended up on that list and they are near 52 week highs.