Friday's action

There was some talk in comments about BRCM as a setup and trade. Several people took it and were stopped out. If you look at the pullback from the high, it is not what I would classify as textbook or orderly. Price bounced around the retracement zone with narrow-range bars, most of them with upper and lower tails (doji, represents indecision), with no real sign of strength after the 3rd bar which was weak/red and had a real body that offset the 2nd bar. For comparison purposes, look at the pullbacks in MCP and MTL...if you study all three, I think the differences will stand out.

I don't have time to post the charts, but will do so over the weekend. All are 5-minute, with the Fibonacci lines plotted over the opening range low to high.

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RIP Mark Haines

There is not much I like about CNBC...in fact, I haven't watched it in years. But Mark Haines was a reason I watched when I did. He was hard-hitting, didn't take any bullshit, yet also seemed to be a likable guy if you ever got past the gruff exterior. He was a true journalist.

"Cary Grant once told me I was his favorite reporter. Clearly the man was highly intelligent."

RIP Mr. Haines - you were a class act.

edit - this is a good article from Forbes..."Why CNBC's Mark Haines Was Special". At the end of the article is the Erin Burnett tribute, where Mark shows his softer side.







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KKD - 052311

I'm getting back into the groove after a few days removed from the market.

KKD gapped up and made a textbook pullback to the retracement zone (RZ). It bounced off that level and I entered on a break of the 14th bar's high. I monitored the trade closely to make sure it didn't reverse at the opening range high (ORH). It broke through that level and rallied to the Fibonacci extension (FE) where I closed my position. For those of you looking for a "later in the day" trade, note how price pulled back to the ORH and bounced (resistance becomes support) - you could have taken an entry there and held for the whole number ($8) for a nice trade (I didn't make that trade, I'm just pointing it out).




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Was LinkedIn Scammed?

A good article from The New York Times:

"There is nothing wrong with a small “pop” in the aftermath of an I.P.O.; investors, after all, don’t want to buy a stock that is going to go down immediately. But during the Internet bubble of the 1990s, the phenomenon of investment bankers wildly underpricing I.P.O.’s so that money could be diverted to favored investors got completely out of hand — stocks would sometimes rise 500 percent on the first day. It was obscene."

Read the article here.

On a personal note, thank you to everyone for your support and kind messages. They are very much appreciated.

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GME - 051911

Posted by Tom C.:

Here is something a little different. This was a gap down, but it rallied to take out the opening range high (ORH). When I see this, I keep an eye out for a pullback from the new trend (new trend is up, whereas the initial trend was down (gap down, decline)). At 10:10 the new high was made, and the pullback started. It fell through the retracement zone (rz), but quickly rallied and moved back above it. There was a nice pattern with support from the rising 5EMA, and I entered on a break of the 11:25 bar. My target was the Fibonacci extension (which corresponded nicely with the $26 level and a declining 100EMA), and it was hit three bars later.



Price chopped around at that resistance and then presented an opportunity for a "beyond the Fibonacci extension" setup. I didn't take it, as it was lower probability moving into the previous day's range (it worked nicely, though).

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Update - 051711

Posted by Tom C:

I wanted to drop in and give a quick update - as many of you know, Trader-X has been dealing with a family situation and unfortunately he has had a family member pass away. As a result, he won't be back until sometimes next week.

I will try to post a chart or two this week and put up some fresh posts for those of you who are communicating through comments.

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Blogger exploded

It appears Blogger has been down for the past 24 hours, so a lot of stuff disappeared, I haven't been able to post, and people have not been able to comment. Hopefully things are back on the right track, and anything that vanished will be restored shortly.

I am hoping to be back next week, provided my family situation stabilizes. Before Blogger exploded, the comments were on fire. If anyone thinks they have a valid setup that didn't work (and wasn't addressed/explained by another reader), note it in comments of this post. I will pick a few to highlight and review over the weekend (or on Monday) and explain why I thought it was valid or not valid.

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Reader comments

I hope everyone got a great start to the new week. I am still dealing with some family issues, but I wanted to put up a new post with a few charts from the readers. I can't stress how productive and beneficial the reader comments have become - thank you everyone for participating. There is a lot of great talk on setups and strategy, and if you aren't reading you need to go look at the various discussions across 70+ comments in the last several posts.

Here are a few select charts and comments:

Howard said...

"I'm loving this site and the comments, I don't think I've ever learned so much. In my quest to be patient I waited until today to pull the trigger and traded MRO. 5-minute chart, bought it on a break of the 10:40 bar, sold at the fibonacci extension. I think this was a classic setup. Any feedback?

Thank you so much Trader-X and others who contribute."




Michael said...

"Hi Grove. I don't pay attention to the overall market direction. But, don't confuse that with not looking at the price action of the stock you are trading, and what it has been doing prior to you deciding to enter. That is what I learned from this site years ago. X used to go into a lot of detail about how he took fewer trades so he could really analyze each one, and I have found it is critical to know what is happening in the context of a trade you are about to make. There is a big difference between entering a pullback after a gap up and strong move, as opposed to entering a pullback after a move up following a weak open and weakness after the open (the later is has a lot of resistance it has to get through, no matter how nice the setup may look).

Generally speaking, I go long on strong issues and go short on weak issues (I am looking to buy on a good signal if a stock gaps up and is strong, and short on a good signal if the stock gaps down and is weak). I don't go contra much.

FLR is a good example today. I made almost $2 entering on a break of the 8th bar (5-minute)."

Terry said...

"FLR was a good trade Michael, I took that one too. I also took SAPE off a break of the 3rd bar. A bit riskier, but still a high probability and a very quick 2%+."

t-money said...

"Michael,

I also traded FLR after the 3rd bar (green hammer)on the 15 minute chart. The stock formed a hammer at the 50% retracement of the opening range. I bailed after it could not hold the ORH. I was curious as to where you exited this stock and why?"

Michael said...

"t-money, I exited on a break of the 24th bar's low (5-minute chart, time-wise that is the 11:25EST bar). Reason was it was a high tail print, and I figured price was going to fall back through the high of the morning** ($71.80 was that high mark). Had price found support at the high (as X says, resistance is now support), I would have seriously considered re-entering with a target of the fibonacci extension. It didn't, though.

**I was sketchy about an extended move past the high because the retrace was a little deeper than I like (to the 50% verses the 38.2%), there was a bit of an upper tail on that first bar, and the first bar's move was a little extended leading me to believe it may have run out of steam for a later move.




David said...

"Had a great trade in DPZ today. It gapped up and pulled back. The pullback was deep in the RZ, so I almost passed. But I kept it on my list and it rallied nicely. I entered on a break of the 11:50EST bar. Price had support from a rising 5EMA, and had rallied out of the RZ. Almost a 3% gain when it hit the FE, but the entry was later in the day than X trades. Do you guys trade this late, or would you have passed?

5-minute chart, by the way, on DPZ. Fibs over the first 3 bars low to high.
Hope that helps."




Anonymous said...

"Tue, May 3rd. GM. Classic X? Not a huge move, but I was able to take a nice sized position due to narrow range, tight spread, and heavy volume. Entry on a break of the 4th bar hammer.

Michael"

Narayan said...

"Michael I traded GM as well. Like minds! I love these because you can get in and out without much slippage.

Trader-X I hope your family gets better."



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As simple as you make it!

When I saw this, I immediately thought of trading. Well, I immediately thought "that is very true", and then I thought about how it applied to trading. It can be as complicated or as simple as you want to make it. Just like happiness!



Thank you for all the positive thoughts and well wishes in comments.

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Welcome to a new week!

Posted by Tom C.

I am extremely rusty at this, so don't judge too harshly. As you probably realized, X disappeared for a few days. Now that you see the news headlines over the past 24 hours, you know why. He won't be able to discuss his role, as it is all highly classified. But I for one want to thank him for his service.

OK, if anyone is offended by my attempt at humor, I apologize. But I could not resist! X is dealing with some family issues, and my thoughts and prayers are with him. In the meantime, I figured I will try to brush the dust off my posting skills and put up a chart or two.

Today offered a lot of nice short setups, with GG being one of my best trades. The setup itself can be classified as a "beyond the Fibonacci extension". GG gapped down, bounced at the FE, and made a relatively normal retracement back to the RZ. At that point, it turned back down and broke through the FE. I drew a trendline (solid black line right below the FE) which was broken around 1PM EST, and then price pulled back to test the FE and the trendline from the bottom (support is now resistance). Price formed offsetting bars at that level, and I entered on a break of the 1:30 bar. My stop was if price closed above the declining 5EMA, and it never did. Price collapsed, and I covered at $53. It continued down to almost $52 before bouncing.



Depending on X's return, I may come back later in the week with a few more charts.

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