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Thursday, November 30, 2006

Thursday's charts

I found a lot more opportunities today than Wednesday or Tuesday. The homebuilders presented several set-ups, with LEN and HOV being my two best trades.

LEN offered an entry off a break of the third bar high. The third bar was a narrow range (NRM), inside bar (note the support from the rising 5MA). There were a few red flags - the entry was below the OR high*, and the candle was not anything special (I would have rather seen it close at the high). But I took the trade aware of those increased risks.

The target was the Fibonacci extension of the previous day's low to the OR high - it was hit three bars later.

LEN then offered another entry above the Fibonacci extension ("beyond the Fibonacci extension set-up") as it closed above that level with the thirteenth bar (note support from the rising 5MA). I was looking for a break of the 5MA to close the position, and it did not happen until the end of the day. I sold as the last bar broke the previous bar's low.





HOV also offered an entry above the Fibonacci extension as it closed above that level with the thirteenth bar. It also had solid support from a rising 5MA, and was a narrow-range bar. As with LEN above, I was looking for a break of the 5MA to close the position, and it happened on the next to the last bar of the day. I sold as the last bar broke that bar's 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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8 comments:

estocastica said...

Nice trades. I didn't have either of these stocks today. I think one reason I miss a few gaps is that I only scan until 9:52am. I'd rather miss a few but have time to quickly look at my entire watchlist for setups occurring at 10:00am. Alsom, it takes my software and data feed (QuoteTraker with iQFEED) several minutes to backfill my entire watchlist (usually 80-100 stocks), and I find that I get really flustered if I'm not done scanning by 9:50'ish!

Here's how I typically scan for gaps:

9:30 - 9:49 --> Interactive Brokers built in scanner for % Gainers & % Losers (manually enter into watchlist)
9:50 --> Trade-Ideas for gaps (export to Excel)
9:52 --> Prophet.net (free edition) for gaps (copy and paste to watchlist)

I know most people scan until 10:30am+, but most of the time, this gives me more than I can handle.

Jamie said...

Nice work X! I didn't scan today because some of my usual suspects gapped up and down, so I just traded those (CAL and TIE).

I'll have to make a point of scanning every day going foward.

Chris said...

I found a good play on the homebuilders too, DHI.

QQQBall said...

good action in the PM sector today. i was a little too demanding on GYMB short as it PB'ed near the OR high. i "knew" it was gonna tank again, but i waited for a higher price to short. happens.

QQQBall said...

X,

nice trades - HOV was beautiful with a VERY shallow PB - nice trade... i know my buddy is long PHM and it was rocking today too.

Estocastica - thanks for the info!

Flatwallet said...

X,

Would MWRK be a "bread and butter" type short.

http://photos1.blogger.com/x/blogger/4293/2367/1600/54730/MWRK-11302006.jpg

Thanks,
LP

estocastica said...

QQQBall -- no problem.

Trader-X -- thanks for the mention.

Jon said...

I didn't catch the move in the homebuilders but I did in the gold. 5+ gold stocks came across my scan so I just went long gld instead of the individual stocks.... looking back it would have been more profitable to trade the stocks (unless I wanted to move more size).