The Art of the Chart

• 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

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…

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.

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.

Tired from trading? No, not at all, just very busy, too busy to post.
I intend to start posting again as soon as possible.