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Monday, February 23, 2009

A few things for Monday...

I meant to post a few more charts over the weekend, but ran out of time. Here is one chart I traded (as did a few people in "Comments"). It is an "in the tail" setup...I don't have time to go into detail - the entry was a break of the fourth bar high, with a partial exit at the FE. The trade was a little riskier because the gap was still in the previous day's range. If you are not familiar with this setup, do a search using the box in the upper-left corner.




And, here is a graphic that puts the amount of money we are spending in perspective:



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9 comments:

DEM said...

Hi X:

Another "risky" in the tail occurred today on the GRMN 4th bar. I say risky because the 1st bar looked really long. The 2nd and 3rd bars had long upper tails and all 3 bars closed below the half way line between the OR high and the 50% line. I did not take the trade for the above reasons. But it was a winner.

DEM

Richard said...

I traded CECO and sold at the yellow line on your chart. Left money on the table, but it was a good trade.

Thanks for a great blog. I am learning a lot.

armo70 said...

Hi X

I traded NEM (10 min chart)- I went short on a break of the third bar's low in a sort of "Top Out" trade. My thinking was that the second bar (although green)had a long upper tail indicating possible weakness and the third bar confirmed this by unsuccesfully trying to break through the ORH and closing below the midpoint of the 50% retracement and the ORH - The bar was also red and had a long upper tail. I was licking my lips to go short on a break of the third bar's low but unfortunately it the action never followed through and took off like a rocket up through the ORH and I was stopped out. Are there any red flags that I should have spotted - maybe the fact that the 3rd bar had a small lower tail? or maybe the upper tail was not long enough in proportion to the body? Or was it just one of those things?

any feedback would be much appreciated - anyone else please feel to add your comments, I really like the people swap ideas and feedback on here - it's a great feature of the site

thanks
Mark

Todd said...

Mark, imo it was not a good setup because the 3rd bar bounced off the 50% retracement and left a lower tail. Even if it broke the 3rd bar low you were entering after a bar that closed above that support level which I am finding is key, and after a failed attempt to go below it.

armo70 said...

Todd,

thanks for your comments, when you say that you're finding it key that a bar closes above the 50% retracement level - I would have thought that most "Top Out" type entries would be above the the 50% retracement level - or do you mean that it's key that it closed above the 50% retracment level after a failed attempt to go below it? I think what attracted me to take the trade was that it failed to break the ORH and it closed below the halfway point between the ORH and the 50% retracement. But in hindsight the lower tail should have put me off - still, it's great to study and keep learning - thanks to everyone for sharing the knowledge

Todd said...

I'm by no means an expert, but have met with a great deal of success over the past three weeks thanks to this blog.

What I find key in shorting these top outs is that your entry is as close to resistance as possible. I mean as close to one of the lines, like the high or the halfway white dashed line. That way there is room to move down vs. the entry being extended from those lines and little room to move down. You want it to have room to get a good running start to fall through all that support below it.

The second key is that it has not bounced off the 50% retracement already. If it does, like with NEM, then that is bullish.

Hope that helps.

Dan S. said...

We look at the chart and see different things. I agree with the commenter above, and took it a step further. I went long nem on a break of the 4th bar.

GG was another great long trade on a break of the 3rd bar.

Many thanks X.

Donna said...

That is a lot of money. Unreal.

sunyata said...

Hey everyone,

The Yahoo! Stock Screener (the Java version) is also very useful in finding morning gaps. The site updates quotes around 9:40am, so there is not much delay.

Wow, I sound like I work for Yahoo!

Best to all!