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Back in January, in addition to noting the historic options expiration day, I also mused a little on the massive volume in Intel and, due to the fact that the price was not holding even after the drop, I said the following:

Because of that action, I’m inclined to think INTC is being abandoned. If so, that would probably mean months of sideways movement, at the least.

Now, a little over three months later, we’ve gotten a little tingle on the far right edge of the chart:

As usual, I did some ad hoc calculating, this time on the volume INTC has traded in each $1 range since the Big Drop. Volume At Price, as they say. (I read years ago how a similar calculation was useful in the futures market, and started messing with it on equities out of curiosity.)

Here are the tallies of approximate volume since the gap in January:

• 1.3 billion shares traded between $21 and $22.

• 1.8 billion shares traded between $20 and $21.

• 2.8 billion shares traded between $19 and $20.

• 100 million shares traded between $18 and $19.

I like to think of these ranges as fluids of different densities. Picture a beaker with those different-colored layers of liquid in it. You’ll notice in this case that the $19-20 layer is pretty significant. Not so easy to pass through. Support. Resistance. You get the idea.

Now Intel has poked its head up above 20 again on some nice heavy volume. Has it found a bottom? A little early to say. Need more chart. But it’s certainly gonna be one I’m checking on daily to see if it behaves well around 20. If it does, it could be a nice swing trade candidate in the very near future.

We got the break of 5.29. Check out the nice long “up” bar on huge volume Thurs 4/6:

What’ll I do now? Follow the rules! Check out the last post. I had my rules for the trade in place before the break happened.

So, what to do now is the easy part. Follow my rules, win or lose. If it turns out to be “lose,” look at what went wrong, consider whether to modify the rules. Then on the next one… follow the rules again.

As I’ve said, I look to get my stop moving ASAP. I’ll start doing my “personal PSAR” calculations based on next week’s action (hey, this weekly-bar stuff is much better on the blood pressure than 5-min bars!), and assuming it doesn’t fall right back below $5, I’ll have a stop at least in the high 4.90’s by the end of next week. Unless the thing breaks upward really hard, in which case the stop will end up being higher. That’d be just fine.

Easy money from here? NOT AT ALL. Notice that although the S&P broke 1310 and the NDX broke 1720 as I’d hoped, the S&P sold off hard to the tune of about 17 points on Friday. But being spooked out is not an option, only being stopped out. Rules is rules.

12 April 2006: Market and SIRI near inflection point

Time to check in on the market in general, and the SIRI trade in particular.

First, the NDX as revealed thru the Qs:

Today (4/12) was an nr7 and then some. I think the last time the Qs had a range of less than 28 cents was a couple of months ago. Combined with today’s very light volume and round-number support at NDX 1700, this little doji could be an inflection point marking the end of a pullback into a newly-formed uptrend. That would be the good news.

The not-so-good news is that the Qs sit firmly below their 10-day moving average and just below the Fibonacci retracement of the recent ~40.80-43.00 range.

We’ll know the next verse of this song soon enough.

On to Sirius. Here’s a 2-month daily chart with a 10-day moving average thrown on:

I wanted to point out how, since its break on 03/17, each pullback to the 10ma has met with support, and we’re right on top of it again.

Now to zoom in a little to a 1-month chart:

Notice the textbook pullback pattern in both price and volume. Shoot, if the overall market were a little less wishy-washy, I’d be looking to put on a swing trade based on these daily bars. Continue reading this post »

My trades have a median duration of probably 2 hours, and normally range from a few minutes to 4-5 days. However, I’m currently looking at a potential setup on a weekly chart. Sirius really caught my eye about a week and a half ago, and I’ve been keeping tabs on it since.

First, the daily chart:

Notice leading up to point (1), we had a high-volume spinning top on the 14th, then decreasing range and volume down to the nr7, low-volume dummy spot on the 16th. Hard to trade the gap-and-run that ensued, but the action on the 17th and 20th were enough to get lots of folks’ attention (including mine). It’s a long time since Sirius moved 75 cents in two days.

Next, see point (2), the sideways price movement on beautifully dwindling volume since the high-volume top on the 20th. This is very clearly a sideways range between about $4.75 and $5.30, so the narrow bars within it are not dummy spots.

Anytime I see interesting action (such as the above), I scroll through multiple time frames to check for a tradable pattern.

Remember, I’m talking about tradable patterns for me. You may see something I don’t and make money in a completely different way on the same stock. To-MAY-to, to-MAH-to, or maybe just ‘maters.

I think the current weekly chart is definitely worth a look:

The most recent week’s bar is an nr7, has the lowest volume in months, and comes two weeks after a high-volume hammer which could serve as a near-term bottom. Both of the bars since the hammer have closed above the 10-day and 20-day moving averages, again something that hasn’t happened in months.

It’s certainly too early to pronounce this a trend reversal, but it’s still a good enough setup for me to try a trade. Here’s what I’ll be watching for:

• First, a break of the 5.29 high set the week ending 3/24. I’ll be watching for the NDX to be breaking 1720 and the S&P to be breaking 1310 around the same time as confirmation that the market is pointed in the right direction.(Note: As of this writing, NDX is 1704 and S&P is 1295). If so, I’ll get long here.

• If the planets line up and I’m able to get long, I’ll set a stop at 4.90, which is at the bottom of the 3/31 nr7 weekly bar and also happens to be right at the top of the 3/17 hammer. That’ll give me a total risk of 0.39, which also tells me my position size. If, for example, I wanted to risk $100 on this trade, I’d need to buy 100/0.39, or about 250 shares.

• If I do get in a favorable position (i.e. don’t get stopped out right away), I’ll start trailing my stop almost immediately.

  The Dave Landry method would be to sell half my position and move my stop to break-even as soon as my initial risk of 0.39 was covered, which would be at a price of (5.29+0.39), or about 5.68. I say “about” because I’d have no problem dropping it a few pennies if the market started failing, for instance.

  However, I don’t know if I’d use the Landry method on this one. How well it works varies with the time frame. It’s great on trades taken off of daily bars, not as well on some intraday ones. I’ve never used it on a weekly-bar trade, mainly because I can’t remember taking one.

  I’d probably just trail my stop using a variation on the PSAR (parabolic stop-and-reverse), or as I use it, just a PS — I don’t reverse. Also I don’t use the “usual” formula for the PSAR. I use more rapidly accelerating factors to get the stop moving sooner. I’m willing to risk getting stopped out early to avoid letting a running stock get too far ahead of me.

So, there’s that. Let’s see if anything materializes from this thing, or if it’s a fakeout. Cheers.

Denny: Alan, Bev is the woman I’ve always dreamed of. An angel in the bedroom, and a whore in the kitchen.

Alan: I think it’s the other way around.

Denny (smiling): Not last night…

from Boston Legal