What was I thinking?

Traded two breakouts for today. The first was ARO. It had a nice daily, but was very extended intraday when I entered and I got stopped out for a loss. What was I thinking?

The other one was HRBN. It gapped up slightly to a new 20 day high and offered a great intraday pattern. Something Toni Hansen calls a D-pattern. I entered right above that pattern. Even on an otherwise boring day in the markets there are really nice breakouts during earnings season. Here is the trade…

Toni Hansen calls this a D-pattern...

Nice intraday pattern

  • Slight gap up and new 20 day high on earnings news
  • Great daily chart (fresh breakout after consolidation, no resistance near)
  • Great intradaypattern (D-pattern)
  • Entry slightly above ideal level @ 20.61 SL@20.45
  • First target at equal move: 21.18
  • Second half sold 5 minutes before the close
  • Result: 2.7 + 3.9/2= 3,3 R
  • Result for the day 2.3R

No trades today

Had other business to attend to so no trades today. Does not look like I missed much.

30 min dummy trade

I have a love and hate relationship with PCLN. Once in a while it offers great profit, only to take it back, r by r. Today again I had a losing trade  in PCLN. But I was able to compensate for it with a nice 30 min dummy setup, that worked out great.

There was not a lot of movement in the market all day. After the gap up it stayed pretty much in range.

The 30 min dummy setup was a reverse head and shoulder on the 1 min chart

The 30 min dummy setup was a reverse head and shoulder on the 1 min chart

  • PCX gapped up slightly on high volume and made a 20 day high
  • Daily chart looks like it has room to move up
  • PCX had a great run in the morning but pulled back gently for about an hour
  • The 6th 30 min candlestick was a hammer
  • The dummy bar was in fact a nice 1 min head and shoulder pattern
  • Entry at 19.30 with a 10 ct stop
  • Exit 1 at 19.50 =2R
  • Exit 2 after an avalanche on the 1 min chart @ 20.30
  • Result: 2R + 10R=12R/2=6R on the trade
  • There was also the 1.1 R loss on PCLN
  • 4.9R for the day
  • No other trades

Only one…

I had a hard time finding nice setups today. There were a few good daily charts with intraday momentum, but I did not trust most of them so I passed.

One of them was PCLN, from my watchlist. It had a tiny 1 min bull flag after the first 10 minutes of trading but it was not ideal. Despite my doubts it ran all day.

Another one was APKT, nice 1 min base at 10:50. Passed on it too. The one I did take was PLL, a fresh gap up after a daily consolidation.

1 min base after a gap up

1 min base after a gap up

  • Market tone was positive for most of the day
  • PLL had a nice daily consolidation before today’s gap up
  • After the gap up, PLL stayed in range until after 10:00
  • Just before the breakout to a new daily high it formed a tiny bull flag
  • Entered on the break of that flag, just before price made a new high
  • Entry was at 40.87
  • Closed half the position at 2R (41.28)
  • Was planning to trail the second half on the 5 min swings, but momentum slowed
  • The second leg on the 5 min chart went further but at a slower pace, so I thought it might correct more than I’d like
  • Decided to trail behind 5 min bars, got stopped out below the tiny inside bar just after 11:40: exit @ 41.67
  • Result: 2R + 4R/2=3R.

Big gap down

Two wave correction off the highs after an earnings gap

Two wave correction off the highs after an earnings gap

  • market gapped down big but found support on the rising sma 20 on the daily chart
  • the low of the day was set in the first 30 minutes
  • I could find no short trades I liked, but still traded PALM short for a loss
  • There were plenty of opportunities on the long side but a good entry was important
  • SMSI I found on the new 4 wk high scans just in time to enter at the right time
  • The second slower wave down on the 5 min chart bounced off the rising sma 20
  • Pace was ideal
  • Stock is thin but trading on heavy volume because of good earnings news
  • Entry was before it broke the high of the day for reduced risk
  • It moved up right away but stalled after 10 minutes
  • Put the stop to breakeven after the bounce on the rising sma 20/5
  • Entry was @ 8.66, initial SL at 8.56.  Risk 10 ct.
  • Target was around 9 but by then it was moving pretty good so I dedided to trail behind the 5 min bars
  • Closed half below the inside 5 min bar at the top
  • Closed the rest 5 minutes before the close. Exit prices: 9.15 and 9.14
  • RW/R=48/10 ct=4.8R
  • result for the day: 4.8-1.1=3.7R

Great day

Did three trades today. Shorted PCLN early on the break of the 60 min bear flag. It moved very nice but failed to hit my first target. This was a higher risk trade because of the bullish daily chart so I set the stop at breakeven when the market seemed to bounce.PCLN could be worth watching for a long swing as it could bounce some more and resume its daily uptrend. All depending on what the market will do the coming days.

The other two trades were great winners APKT did 3.5R and DLTR 5.8R for a total of 9.3R.

APKT 1min intraday stock chart daytrade

  • really, really nice daily chart
  • nice first move out of the open
  • 1 min pace developing positive
  • entry was okay, but the later entry after the flush around 17:30 would have been better
  • don’t mess too much with the initial stop, wait for the first breakout of the range
  • Patience was rewarded handsomely
  • risk: 13 ct; reward: 46 ct; RW/R: 3.5R

DLTR 1min Great day

  • Great daily and weekly chart, nice gap out of consolidation
  • Gap on good earnings news
  • Missed the first entry, though I had it on my watchlist at the time
  • Kept checking back for a possible new entry
  • Nice 5 min bull flag was the setup
  • Entry was just before the break of the flag after the flush move and the tiny 1 min phoenix (Toni Hansen)
  • Based the stop on the 1 min setup, this often works if the entry is good, eg not too early like APKT
  • First target was the 5 min bull flag equal move.
  • Second half was closed when  the trailing 5 min swing stop was hit.
  • Risk 15  ct; reward 87 ct; RW/R: 5.8R.

Late…

Due to other commitments I missed the open and first hours of trading. By the time I got behind my computer I had missed all the fun. Momentum in the market made it clear there was not a lot of downside, while it still was too early to go long. I did scan for longs but was not prepared to enter unless the market gave a clear reversal pattern.

The nice thing about Quotetracker is the possibility to set trendline alerts. I have found no other software that can do that except freestockcharts, but while freestockcharts is great, the alerts are not great of my kind of intraday trading.

After scanning many, many charts I had set several trendline alerts on charts I thought might prove interesting but only a few triggered. Most of them I skipped for one reason or the other. I thought I was not going to put in even one trade.

The first time WSM triggered I still was waiting for the market to give a signal, though downside momentum was clearly slowing. Just at 14:00 a 5 min double bottom triggered in the SPY and WSM gave another alert as it cleared the previous swing high. I liked the 5 min Cup and Handle WSM was forming so I quickly clicked the order.

The market stayed choppy, but WSM performed great. Around 14:30 it showed a reaction, after that I updated my stop to just below the sma 20/5 at that point. I was aiming for an equal move target but just short of that target price stalled. I cheated on my stop and tightened it to just below the consolidation. I was not going to risk all the paper profit for a few extra cents. Half an hour later it it target and I sold all.

I was frustrated becuase I missed out on all the fun, but by just sticking to the routine of focussing and scanning, setting alerts and observing the market, I managed to get a great result despite that, even if only with a single trade.

WSM-cup and handle, intraday trade, 5 min chart

  • Entry: 21.16; SL: 21; exit: 21.60
  • RW/R: 2,75 R

SPY-5 min chart - intraday Double Bottom

Hard day to read the market

It was a hard day to read the market, because it moved so little and erratically, at least to me. The market sold off from the open but there was no follow through after that first move (consisting of 2 waves down).

Instead momentum turned slowly positive and during lunch hour I found a few setups. Ended up taking DNDN (I should have passed on that one) and BIDU. DNDN was a loser, and BIDU did not meet my target but gave a nice result despite that.

BIDU small Hard day to read the market

  • Though very thin the 1 min base had great pace development
  • After the initial move it came back hard but according to my rule I have to sit the first reaction out before I can update the stop or exit
  • My target was the morning high, but it did not make that.
  • Got stopped out on the second leg off that 1 min correction
  • Held stops very tight because of this choppy market
  • entry 505.50, stop: 504.90, exit: 507.20
  • Result: 2.8R

Choppy day

Base breakout

  • difficult market todayI liked
  • strong first move out of the open
  • stalled near previous days high
  • sold off pretty strong
  • came back strong into the high
  • then fell slowly into the rising sma 20/5
  • I really like to buy these second bounce in a range trades before the breakout
  • Did not see it in time to buy it above the 5 min bar bouncing off the sma 20
  • It almost looked like it would be a scratch around noon, just missed the stop
  • Hit target after 14:00
  • Closed remaining 5 min before the close
  • Risk: 15 ct. Reward: 35 ct + 46 ct = 40,5 ct
  • 2.7R

A few trades

Breakout trade

  • breakout to high (not really my favorite, but I thought this one was worth a try
  • good flush move on the 5 min chart into the rising sma 20/5
  • second test of resistance was followed by a weaker downmove
  • second bounce in range on the rising sma 20/5 could have been a better entry (smaller risk and better reward)
  • I missed that optimal entry
  • closed half after equal move had been hit
  • trailed the rest below sma 20/5 pivots
  • closed other half 5 minutes before the close
  • risk: 17 ct reward: 34 and 47 ct
  • rw/r  40,5/17=2.38 R

  • RIMM
  • Was on list because of strong performance last days
  • Bounced off previous low after a steep sell off from the open
  • During the morning pace had turned more positive
  • When I spotted it it was building the handle of the shallow cup
  • Since it had a good daily I thought it might go to equal move or sma 200/5m depending on momentum
  • Had a nice 5 min flush hammer in the handle
  • Entered after the break of the trendline
  • Missed the order at first but price came back to my entry level (I did not want to chase it because of the resistance being so relatively close)
  • Closed half at the sma 200/5 (slightly beyong equal move, but pace was soo good by now I was willing to take the risk)
  • Set the stop to breakeven on the rest.
  • Closed remaining 5 minutes before the close
  • Daily looks not bad, could have held on to a few
  • Entry 70.90, risk 18 ct; reward 35 and 47 ct.
  • RW/R: 41:18=2.25R

Rimm Small A few trades

A few thoughts on trading

Focus on the stuff that really moves!

It is that simple.

Most successful trading strategies are based on that. Technical analysis works best on stuff that runs up or down faster than the rest. The stocks that run up real hard also go down best.

Use top gainers/losers, gaps, unusual volume, whatsoever. It helps to check market direction and use relative strength. Stocks that hold up well during market corrections are usually good candidates to buy once the market reverses. It is best to wait for a consolidation or a pullback before entering.

For day trades the reason of the move is not that important, but if you want to hold partials for a swing go for earning surprises, big orders. Upgrades and takeovers usually don’t work beyond the day of the move…

Another hard day

It was a hard day to trade, with the market gapping up a tiny bit but falling for close to half an hour. The SP500 formed a 1 min range (I actually look at the SPY) that seemed to favor the upside, so that was  was looking for a nice long setup. I found two that I traded, AMP was the best one and also showing the most promise.

AMP gapped up big and held up well when the market was falling. It bounced back up very strongly around 10:00 AM and then formed a beautiful 1 minute base close to the rising SMA 20 on the 5 min chart). I entered with a tight stop, took half off at first 1 min resistance and was aiming for high of day for the rest. It offered two new entries that I passed on (see the 5 min chart for that) and when price approached high of day and 37.00 round number I closed the rest. As can be seen, the second half offered a nice R/RW, better than 4.

AMP Small Another hard day

Using smaller timeframes

While I look for 15 or even 30 minute pullbacks in strong stocks I use the smaller timeframes to time my entry and to set my stop. This greatly improves risk/reward. This works best for me  if entering a long near support or a short near resistance.

ISRG proved to be a nice example of this technique…

  • Alert trendline is horizontal dotted gray line
  • Blue line is entry
  • first diagonal red line is first target
  • 2nd red diagonal is exit (I always exit day trades 5 min before market close)
  • horizontal red lines are initial stop and updated stop (below 1 min HnS)
  • The black line is the simple moving average 1 min 20 period
  • The grey line is the 5 min 20 period moving average, acting as support.
  • Click on the chart for an overview of what I look at.

ISRG 1 minute chart for timing entry and setting stop

Early entry in a range pays off well

another second bounce, bund 5 min chart

If the trend is up and momentum in the range is positive, the second bounce in a range is often a better entry then to wait for the breakout because it can improve r/rw by a factor 2 to 4

Do the opposite of what I feel like…

ipg chart small Do the opposite of what I feel like...I used to buy when a stock moves up and sell when it goes down. It took me a long time to realise that this might feel nice, but really does hurt profit potential.  Toni Hansen showed me the importance of momentum.  IPG was a strong mover in the morning but came off the highs.  On the 15 min timeframe I saw three bars up, and three bars down, downside momentum slower then upside. Timing is everything and if there is a three bar move I only start looking to buy after it has reacted for at least the same amount of time.  When price is near support, I start looking for a change in momentum (or pace as Toni calls it) on a smaller timeframe, often the 1 min chart. I try to enter as close to support as possible. It improves r/rw tremendously. You might think by entering early that a flush move is more likely, but often the opposite it true. Click on the chart to see the complete marketview I look at.