TSCO - 012711

A submission from Eric:

"Trader-X, for your consideration:

TSCO, 5-minute chart, 8 and 100 EMA, Fibonacci lines plotted over the previous day's close to the current day's open.

I entered on a break of the 8th bar's high. Price gapped and ran, and then pulled back to test the Fibonacci extension as support. Also providing support was the 8EMA. I entered at $51.57 and closed the position at $53.00. I think you would give this a B or a C because it didn't bounce on the Fibonacci extension. It broke, but then made what you call an "offsetting bar" (bars 7 and 8) and rallied from there.

Thanks for the great site. Feel free to post my trade."

Nice trade Eric. I do prefer price not break the FE when it pulls back, but the offsetting bars with support from a rising 8EMA was a compelling signal. I didn't trade TSCO, but had I seen the setup I think I would have taken it.

Here is Eric's chart with the trigger bar and exit marked:



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I'm on Twitter

Well, technically, a quote from me is on Twitter.

I have a few charts to post this weekend, but it will probably be Sunday before I get to them.

Enjoy your weekend!

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Good luck Trader Mike!

It appears Trader Mike sold his blog:

"Somewhere along the line my zest for blogging waned. There are a few reasons for that but I won’t bore you with the details.

In order to breathe new life into the site I’ve decided to turn it over to Blain and his team at Reink Media Group. Blain, who I’ve known (virtually) for several years, is passionate about both his trading and writing. I know that he has big plans for the future of this site and I’m confident that it’s in good hands. I hope you will all keep visiting and/or stay subscribed."

I fully understand the "zest" for blogging waning - it has happened to me many times over the years. The good news is, Mike says he will continue to contribute to the site periodically.

On a personal note, I owe much to Trader Mike. When I started this blog over half a decade ago, Mike visited and mentioned many of my posts on his site. As a result, my readership grew and the Trader-X blog thrived.

Trader Mike, I wish you all the best! Thank you for all of your help over the years, and I am sure life will continue to reward you for being the person you are.



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JCP - 012411

JCP was a textbook gap up with a pullback and setup "beyond the Fibonacci extension". The only problem was that the entry was below a whole number ($32). I took the trade, but watched for resistance at that level and planned for a quick exit if it materialized. It didn't - price cut through $32 and rallied to the $32.50 level, where I closed the position after seeing multiple signs of weakness.

Fibonacci lines were plotted over the previous day's close to the current day's open. The trigger bar is marked (a narrow-range, hammer-type candle that closed green above the FE). My exit level is marked with a horizontal, black slashed line. A nice .50+ gain in under 30 minutes.



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NVLS - 011411

No reader trades this week, so here is one of mine from yesterday.

NVLS gapped up, broke through the Fibonacci extension (FE), and pulled back to test that level as support. The fifth bar formed a nice hammer closing above/on top of the FE, and the sixth bar was the narrowest range of the morning. In addition, the FE was a few cents above the whole number ($34), so the fifth and sixth bars also closed above that level providing additional bullish confirmation. The only negative about the trade was that price was a little extended from the 8EMA when I entered on a break of the sixth bar's high.

Note - while the stop is almost always the opposite extreme of the trigger bar, in the case of NVLS I placed my stop at the fifth bar's low. The sixth bar (trigger bar) was too narrow range, and it would have been easy to get stopped out (though, in hindsight, it never broke the sixth bar's low).

In the previous comments, someone asked how I determine a target for the "beyond the Fibonacci extension" setup. It is more of an art than a science, and there are several factors that I consider. I take the distance between the high and the FE, and add that to the FE as the first target. I look for whole numbers and the halfway point between whole numbers for both targets and resistance/support for a continued move. And I watch for bearish reversal candle patterns.

In the case of NVLS, I was watching price to see if it could make it to $35, which was my maximum target. It made a nice move up to $34.88, and then pulled back. But the pullback was orderly - had it broken below $34.50, I would have closed my position. But price formed a hammer above that level and rallied to $35. It continued on for another $2, but I was happy with my ~3% gain.

I marked the $34 and $34.50 levels with a horizontal, black dashed line for easy reference. My Fibonacci lines are plotted over the previous day's close to the current day's open, and are marked in white. Also note, a break of the fifth bar's high was a valid entry, but I missed it.



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ADSK - 010511

I hope everyone had a great start to 2011. I am back to trading, but posting on a regular basis will be difficult over the next few weeks as I am still dealing with some family issues. I hope everything will improve by the end of January, and the rest of 2011 is healthy and happy!

Here is a submission from Tim. I encourage anyone to post trades in "Comments", and I will try to check a few times a week and post a chart or two.

"X, I wanted to participate in your call for reader charts. I traded ADSK on 01/05. It was a little "bouncy" around the FE, so I don't think it was the best setup as opposed to one that found solid support on the top. But, I entered on a break of the 5th bar's high (5-minute chart) and watched the $40 level closely for a reversal. However it broke through and made an orderly pullback, so I stayed in and rode the move to $41 and closed my position. My fibonacci lines are plotted from PD close to CD open, and I use the 8 and 100 EMA.

Thanks for all of the guidance, I am hoping 2011 is my breakout year!"

Here is Tim's chart with the trigger bar and exit level marked.



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Every day starts a new year!

Happy New Year!

There is a good post over on The T.A.D. Principle blog that is worth reading.



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