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Thursday, July 27, 2006

SONO - 072706; 15-minute chart

I usually avoid stocks with a really wide-range first bar, as SONO had today. Based on my experience, they are a higher risk trade because there is a good chance that price made the bulk of its move in that first, wide-range bar. Most tend to just go sideways or drift for the rest of the session.

But, SONO kept catching my eye as it reversed from the morning collapse and then stalled at the 50% line from yesterday's high to the opening range (OR) low. It resumed moving lower, and printed a "hanging-man" as it fell back out of the retracement zone (thirteenth bar). The fourteenth bar was narrow-range, an inside bar, it closed weak and left an upper tail. I entered on a break of the fourteenth bar low and rode it back down.

I took a small loss on CMCSA. My entry was a break of the sixth bar high as it broke out of a triangle pattern. It was a riskier set-up as it was below the OR high, and it stalled out when it reached that level again. That is why I always print my standard disclaimer* when I enter below the OR high (or above the OR low).

*as with any entry below/above a previous high/low (in the case of my charts, the opening range (OR) high/low), you need to watch for resistance/support as price approaches those levels. If it stalls, you want to exit. If it breaks through, the odds are good you will have a move to the corresponding Fibonacci extension.

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5150 said...

Just curious if this trade is from Tom C. or X?

Trader-X said...

If you like it, Trader-X. If not, Tom C!!!

Just kidding - usually Tom C. puts "posted by" before his posts. Since my name is on the blog, I usually don't (anymore). These were mine.

Rickey said...

AHHH - I watched SONO all day too but did not pull the trigger. Great trade.

5150 said...

lol....I was curious because T.C. takes alot of trades that I dont think you would. Since you are the master, I want to be sure who is giving the lesson....Thanks for all you do....

Trader-X said...

You may find Tom C. is more the master...

Tom C. sometimes takes what I would call "riskier" trades than me, but they are usually good trades. It just all depends on your tolerance level.

He always mentions "X would rate this...". It kind makes me feel like a parent figure, somewhat old and stuffy..."back in my day, we would have never taken that trade!!!"

: )

QQQBall said...

if you wanna see a stock freeze at the 1.382 extension, check out PDS. only canroy royalty that is a driller... pays a nice divvy too, not that it matters for X-trading

Anonymous said...

I have been following your site for a while and find it really great! I had a few questions for you. If you trade a stock that breaks above its 15 min hi or lo and continues in the same direction, what do you use for a protective stop? Do you pay any attention to earnings reports etc? When selecting a stock with a big 15 min move, do you generally use a % change or absolute dollar amount?


Peter Crane

Rickey said...

Hey peter, you might try posting on a more recent thread. I don't know if those guys will look back here.