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Saturday, April 16, 2011

A few charts

I traded AGO yesterday. Here is my summary:

1.) Gap up and strong first bar.
2.) Second bar was weak, and reversed the early gain.
3.) Price formed a double bottom and worked its way up from that point.
4.) The 6th bar closed above the 50% retracement of the morning's range. The next half dozen bars formed a nice base above that level, and never closed back below it.
5.) The 11th bar formed a hammer-type candle above the retracement zone, and had support from a rising 5EMA. I entered on a break of that 11th bar.
6.) I exited at the Fibonacci extension (FE) six bars later for a 3% gain.



I have not had time to pull charts from comments this week - my apologies, but I hope everyone takes the time to look at them on their own. I did have a comment come in last night and I was looking at the chart - however, I inadvertently deleted the comment and could not get it back (I am REALLY sorry about that). The chart was MBI, and it was a "u-turn" setup. The commenter entered on a break of the 11th bar, but questioned his entry as that trigger bar seemed somewhat overextended. On the plus side, it was rallying off the 50% retracement, had support from a rising 5EMA, and was a strong bar that closed at its high.

He took the trade and exited with a nice gain at the FE. Here is the setup, and if the commenter will please claim credit for this trade I will publish his name and promise never to delete his comment again!



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15 comments:

Anonymous said...

The MBI trade was me Trader-X. No worries. I was interested to see if you or other traders would have taken or passed on it.

Terry

Grove Under said...

Had another "inspired by Trader-X" trade on Friday, April 15. Just for kicks, I sometimes watch the "Rapidly Rising" screen that's a part of Tradestation. It rank orders the biggest movers over the past 2 minutes. This is how I found this LL -- serendipity.

LL - Success

Went long on the break of the 15:28 bar.
http://imgur.com/64BY6.png

DETAILS
2 min chart, fib from today's opening 15 min range, standard Trader-X MAs

RATIONALE
* Although it was a late Friday afternoon, the sudden increased activity up with large green bars felt like a gap open situation.
* It started to resemble a "beyond the Fibonacci extension" or "buy at the OR high" type of pattern.
* I recognized the setup a bit late, but still got on board about one bar late (15:28) with only a few cents slippage.

CONCERNS
* What the heck am I doing on a late Friday afternoon getting into a news or fund buying or whatever driven move on a low volume stock!?! Hey, the pattern spoke very clearly to me, the chart looked clean with good volume, so I couldn't help it.
* The OR high was not far above. The stock reacted there, as seen by the long upper tail on the somewhat bearish but still green 15:30 bar. Once it broke above that bar, I knew momentum was strong.

TARGET
* The fib extension just above $23.50.
* Sold out at $23.50 since it broke above that level, hit the FE, and started falling back. Yes, I admit, I felt a little regret leaving another $0.50 on the table.

INTERESTING OBSERVATIONS
* Similar to what I wrote in an earlier comment about whole numbers, check out the fake out break out near the end of the day at $24. It went through by $0.10, then came right back down below the whole number. They ran all the stops, but with no follow through buying, it fell back down and went below $24 by $0.12.

If you're in a trade/initiating a trade at a whole number, I believe this is useful info for determining whether to stay on board or to bail out.

* At the time, I didn't think there was any real fib support on the setup, except for the retracement zone slightly below (as posted in the chart link above).

But in hindsight, I drew the fib lines from the prior close to the current open...check out where the FE line is. Based on that setup, this really was a buy above the FE trade. Fibonacci magic!

bl said...

AGO-nice trade Tr X. My >5% gap WL: AGO MBI ABMD AMLN HOGS INFY CRUS GOOG. 5/10/15/30 min charts some nice confirming. Traded AMLN ABMD small change but getting my WL set up squared away. Earnings season=opportunities

מאיר זייד said...

Terry, I also saw the MBI setup. I didn't take the trade but I followed it most of the day.
I got interested when the breakdown of the 10$ support failed.
I thought the entry should be on a break of the 10th bar which was a nice resistance.

-Meir

bl said...

G.U.
Those types of trades can be profitable or deadly based on rumor, manipulation, etc. Some of these are non gappers that pop big: ACOR on Th jumped. I'm nursing one I bot 4 months ago. Try doing a "One hour after the open New >5% scan" and put up the results after 5 days. Just an idea.

Grove Under said...

Trader-X and community:

Today, Monday, April 18, the market opens down big. So naturally, when you sort the watch list by volume, both the gap up and gap down lists have a high number of ETF type stocks.

Do you filter out those stocks, or do you include them for evaluation?

I'm trying to get a sense of how well those (especially the 2x and 3x) ETFs work with the fib levels, setup patterns, ability to run, etc. Thanks!

Grove Under said...

bl:

Very much agree how those big movers out of nowhere can be deadly!

I'll need to study more of those rapidly moving stocks out of nowhere to see if a lower risk setup is possible.

And thanks for the research idea on the > 5% stocks, that sounds interesting.

Anonymous said...

Grove, IMO Fibonacci shows no bias. It will work on any instrument from currencies to futures to stocks to ETFs. The bigger question is can you find a good, low-risk setup in those instruments.

Terry

Attitude Trader said...

I can recall, way back in the good ol' days, when X would post NQ charts once in a while (I think he just did it to get me off his back). Again, I know most here are not trading futures, but "X-style" trading really is suitable for a lot of different markets so…

@ Grove (and concurring with Terry)

I was going to comment about this today (Monday 4/18) anyway but it kind of answers your question too as far as the application of X's methods to other markets.

I traded ES today and although it wasn't "textbook," using Fibs drawn from PDH to ORL on my 5min chart, price reacted nicely (turned around) right at 1/2 FE (119.1%) with an NR green spinner candle for trigger, and then moved around the other levels I plotted pretty nicely for the rest of the day.

What was even nicer was how my 15min chart supported that aforementioned level but with Fibs drawn over different price ranges: Price pierced (by only 3 ticks) 1/2 FE of a Fib line drawn over the last major downswing (4/11 high to 4/14 low), and this coincided with the FE of a Fib line drawn over the last upswing (4/14 low to Friday's high), which is where price hit, to the tick, before turning around. Price then used 1/2 FE of that same range for support to move up again, which (surprise, surprise) was where a hammer formed right at the FE of the OR on my 5min.

It's pretty nice when you have a sensible, and relatively simple, way of viewing the market that can provide so much help in the decision making process. Thanks X.

I posted my charts on my trading journal blog in case anyone is interested.

-AT

Grove Under said...

Terry & Attitude Trader:

Thanks for the feedback regarding the setups and usage of Fibs. Great point on looking for the stock selection and setup, and that it works for nearly all markets. A.T., I like your example on the ES.

I just need to make sure I don't enter into too many stocks/ETFs concurrently that are essentially the same industry/index/underlying basket of stocks.

Back in the early '90s, I read a book called "The Geometry of the Markets" by Bryce Gilmore. Although the book also discussed the usage of Fibonacci with time, my biggest takeaway was usage with price levels.

When I traded the Swiss Franc futures back then, there were days when a cluster of Fib #'s appeared at a certain level. You could then place a limit order, and buy/sell at or near the bottom/top of the day with a small stop.

I just drew some Fibs over the various "crazy" Forex swings of the GDPUSD this morning (4/18 from around 6:00 AM to noon Eastern), and wow, things are really not so crazy after all. (To see this work, make sure to add a 1.618 Fib extension to the standard Trader-X setup).

I just wish I had more time for research. Life happens. Hopefully, that precious time may become more available next month.

bl said...

G.U. I think ETF day trading for the most part a waste of time, ditto with the uber rally >5% after first hr. But non gapper SNDA did well. Problem is they don't have "structure" like the gappers do. Alot of them hit 5% and reverse. Monday WL: AMRN CHTP TITN INVE GNOM REGN THOR GNK KNL VPHM HTWR, good 5,10,15,30 min charts. Traded AMRN 5/5" bar way too early, stopped out. Must have patience...the set up does unfold.

Grove Under said...

bl:
Thanks for your comment regarding trading ETFs.

Do you mean many ETFs don't have "structure", similar to how low volume stocks or those with very wide spreads act and chart different?

I'm still somewhat on the fence. Some ETFs, especially the 3x flavors that have high volume and tight spreads, really get juiced and seem to be good for a quick trade. Some also have "clean" charts and therefore, setups.

But then again, there are some ETFs that have low volume. They have active robots performing as market maker keeping the bid/ask actively in line with the underlying securities. But reliably using moving averages and Fibs is tough with all the holes in the charts from the lack of trades.

Maybe I partially answered my own question...it all has to do with stock selection? Surprise!

bl said...

G.U.
I'd say compare and conrast PWRD(Tues gapper) and TNA TZA, and go from there. When you trade etf's you are trading alot of crosscurents in that basket of 50-2000 stocks so the structure is "muddled" imo. Tues %gaps: XG DANG CCIH VHC PWRD TCK(2") TVIX 5/10/15/30 min
>5%>30"Open: BBBB QPSA BKS

Flowtastical said...

For those who want a decent filter/scanner try Telechart 2000 from worden.com It's $30 a month and you can pay for real time exchange info for real time charts/scanner.

It has a gap up filter which I think is useful. There is a little lag between their scanner and more professional scanners but its still worth it.

Grove Under said...

bl:
Great examples, and what a nice setup PWRD was (5 min). I totally missed that, no trades for me in the past couple days due to time.

After a closer look, seems like the ETFs are generally noisy (lots of wicks) even those with high volume. Although when there's a sudden move, some of the ETFs seem to clean up.

Flowtastical:
Agree on your recommendation of Telechart. I haven't used it in a while, but might have to revisit. Better for swing/longer term trading, and nice user interface for scanning and watchlist creation. But I can see how getting the real time feeds could make it good for intraday use.