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Tuesday, March 03, 2009

Tuesday roundup

First, thanks to Tom C. for an informative post on the "u-turn" setup.

Next, RJ's daughter sent me an email and said she downloaded all the comments (no Internet access in the hospital) and read them to her father, and they both appreciated it very much. We are close to 40 comments - I hope we can double that over the next few days. I am a big believer in the power of positive thinking and I know all of the support and comments will go a long way towards helping RJ recover. So leave him a comment here.

Finally, I did not find many "great" setups Monday and Tuesday, but I still had some good trades. I wanted to highlight a variation of the "top out" where the third bar closes below the halfway point between the morning's high and the 50% retracement. The entry on both charts was a break of the third bar's low.

STT had the added advantage of being turned back down at the previous day's low (the third bar closed back below that level). And if you do a more detailed analysis of GENZ, you will see that price is turned back down at resistance from the FE of the previous day's high to low.

I covered both positions when price reached the OR low (and left some money on the table!).





note - I am done for the day, so the GENZ chart is only through 1:30PM EST.

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7 comments:

Jim said...

Woohoo. I traded STT. I love it when I trade the same thing X does! I even held longer and pocketed a few more dollars!

Thanks Trader-X!

JF David said...

I went long on MCD today on break of the 4th candle high on a pullback setup.

A also saw GENZ but i hesitate to take the trade. :(

Anonymous said...

Went long ABM on the break of the high of the 13th bar, which was also the narrowest range bar of the session until that point. Had to step away from the desk for a few hours. I set my target at 14.85. I wanted it close to the opening range high of 14.98, but not too close, since the 2 previous approaches to that figure (bars 3 and 5) left long upper tails. Target was hit approximately 3 hours later.

Thanks X.

Chris M

armo70 said...

Hi X

I traded MCD today as a "Top Out" trade on a 10 min chart. After a Gap up and strong 1st bar, the second and 3rd bars both looked weak to me - with long upper tails. I thought it was also significant that both of these bars failed to close above the midway point between the 0RH and the 50% retracement level that you talk about (the 3rd bar also posted a lower high than the 2nd). I went short on a break of the 3rd bars low. It looked to be going in the right direction, but then it reversed and the price inceased and I was stopped out. Looking back at the trade, it still looks a reasonable setup to my eyes and I can see the rational behind why I took it, but I'm always striving to improve and refine my setups and would value your opinion as to whether there is anything which would have put you off from taking this trade.

thanks again
Mark

Todd-O said...

On MCD, there are a few red flags. You mentioned one - strong 1st bar. In fact, a really strong, wide range 1st bar. That would have precluded me from going short. I like to see tails on the first few bars, and not all that green. Next it had just broken out of the previous days range, which in my experience is a huge bullish signal. I would not look to go short. In my opinion a top out works best on a gap down and rally into resistance or on a clean gap up meaning gap above the previous range. MCD gapped in the previous range and broke out, there is a difference as many people will sell a big gap up and out of the previous range where they will buy a rally out of the previous range.

armo70 said...

Todd,

thanks for your comments, very helpful - and makes a lot sense

JF David said...

I went long also because MCD was holding great while the market closed his big gap, once the market gap is almost filled, upside potential is greater for stronger stocks in the occurence of a bounce.