Yes, it did, and yes, they were. I’m about to drown my sorrows with Popeye’s Fried Chicken and Sam’s Choice Caffeine Free Diet Cola, but I just wanted to say
Archive for December, 2006
A quick chart on a setup that occured Friday. It wasn’t a runaway profit-maker, but it ended up being worth about “3R” (42 cent gain on a 14-cent risk), a solid gain nonetheless. I want to show it as an example because of the way in which it set up.
We use various measures of support and resistance to determine whether probability is on our side when we take a trade: Highs and lows of the current and previous day, opening range tops and bottoms, the 5ema popularized by Trader-X, and of course if the stock pulls back and forms a Dummy Spot, well, it’s pretty obvious that I’m partial to those.
Friday Federated Department Stores (FD) did something unusual: it lined up for an entry with most every pupular indicator in one little bar:
Setups happen every day, and often when we spot one in conjunction with a reliable indicator as confirmation, we have a trade worth taking, using our normal position size and risk management. However, on the rare occasion that a setup occurs simultaneously with multiple levels of resitance failing, that one’s not just a run- of- the- mill setup… it’s begging to be spanked.
Why did you tell that reporter all your secrets?
It’s complicated, and you’re too young to understand.
Mom says it’s because you have dependency issues, and it was only a matter of time until you threw it all away on some tramp.
Well, that’s one theory…
After wasting the earlier part of the evening on Clerks II, I’ve made up for it with Thank You For Smoking. Brilliantly written, well-acted, acceptably directed. Well worth the rental.
What I will do is quite simple: 1) get stopped out or 2) add to my position on a break of today’s low with a simultaneous lowering of my stop for the overall trade to keep my risk constant. (From my post Thurs. night 11/30)
The Qs did indeed break, and it was almost picture-perfect:
The entry point, or for me, add point, was the break of Thursday’s low of 43.79, with a concurrent lowering of the previous stop. Previous stop was 44.62. Let’s see…
High of the add bar was 44.35.
We had a lower low of 43.26, so the patented DummySpots 20% trailing stop method would give me a new stop of [44.62-((44.62-43.26)0.20)], or 44.35.
Hmmm, which one should I go with? I think I’ll go with 44.35!
The late-day buying prevented this from being a perfect drop. Perfect would have been a long black (red) line ending with a close a nickel or two below the morning and previous-thrust lows, which were both 43.34.
Instead, we got the buying, the late-day rally, and the doubt. Are the buyers losing hope? Are the sellers smelling blood? Have to wait till Monday to know for sure.
Remember I said if GLD hit 64.44, I’d go long with an initial stop of 63.89? It did, and I did:
I can’t stand the way it broke, then failed back deep into the prior day’s range. I like to see ‘em break and run. Not that that makes me unique. Odds are, I’ll get stopped out on this one Monday. C’est la vie. Here’s hoping for a touch more dollar weakness.
Lucky me, I’m working this weekend, so I’m off from the ICK! regular job Monday. Hope to catch a couple of day trades, in addition to following the swings. Should be a veddy intevesting day!