Featured setups from Tuesday February 8, 2005 closing data symbol scan
Jump to: Long Setups | Special Situations
Notes for the Day
Be careful of the Carly Effect fading quickly after the open. I will look for some short candidates in the next hour.
Entry and Exit Strategies
Entries: Each chart posted includes the TrendVue High/Low indicator in the chart legend, showing the high and low of the prior day. We refer to these values frequently for setting stops, alerts and initial protective stops.
Our trade entry methodology stresses that price should prove to us where it wants to go, consequently all of our setups involve placing entry stop/stop limit orders where a trade will be initiated for us automatically, if price is able to move in the expected direction.
When price does not comply, we evaluate the setup to determine if it is either a) an expanding pattern or b) an invalidated setup. For example, a 3 bar bull flag setup that does not trigger can be followed up the next day with a buy stop above the new 4th bar, provided that price doesn’t invalidate the bull flag pattern.
Exits: Once in a trade, we must place an initial protective stop as soon as possible. Consider this stop your crash stop – an emergency measure which you hope will never get used, but is there for your protection in case you lose all connectivity to your broker or some other unforseen event takes place. The initial protective stop, unless noted otherwise, is always at the opposite end of the bar used to trigger a trade.
For example, if our trade setup for a long trade is based upon a break of yesterday’s high, we will use yesterday’s low as our initial protective stop.
The next task for us, once in a trade, is to find the earliest reasonable opportunity to move stops up. Trade and risk management is a highly personal topic; we can only relate to what works for us. In general, once a trade is substantially profitable, or has started to trend on a 10 or 20 minute chart intraday, I move to a break-even stop immediately.
Once the trade has surivied its first day, we are already on watch to look for our profit exit. Here your personal objectives come into play. A longer-term investor using swing trading techniques to improve entry and exit will tend to give a trade some room. Our recommendation is to use the break even stop until the stock starts to trend (higher highs, higher lows or the reverse in a down trend).
Short term swing traders will tend to use price extension estimates and pre-place exit orders at these estimates. This discussion goes beyond the scope of our daily swing trade service, however we are happy to entertain questions in TrendVue Trader Talk on any subject.
Long Setups
General common strategy: Unless noted otherwise, buy stop just above the “high” value, with an initial protective stop at the low value of the bar, not below the bar.
Test of Bottom – Reversal
Retracement or Pause in Up Swing / Up Trend
XLE Energy ETF – note comments on XEG:C elsewhere.
OIH Oil service sector ETF
ATML still looks like it wants to go up – and since its held the 50% line on that tall up bar, it may yet be worth another attempt.
Test of Top – Continuation
XIC:C (TSX) TSX 60 ETF classic retest of top with a convenient down bar to capture a move up.
XSP:C (TSX) S&P 500 Tracking ETF – you’ll note that its actually retesting a top here even though the S&P 500 is not – this is the currency effect. For Canadian traders, a rising US$ and rising S&P makes XSP a good vehicle.
Special Situations
XEG:C (TSX) Energy ETF – this rising wedge may prove not to resolve to the mean ( base of the wedge ) so a long could be attempted here but be aware of the risk – energy has been rising in an almost parabolic fashion lately even as Crude continues to pull back.
XGD:C (TSX) Gold stocks ETF – lets be honest, Gold looks terrible and the US $ continues to rise – there is yet no reason to get excited in this sector but since a test of bottom is here lets at least be aware of it and ready to act if something should develop. More likely a weak bounce should be shorted than bought long…
BGO – most charts look terrible and BGO is no exception but offers a “piercing line” possible reversal here.
ELD – has a ledge, use the three day high as an alert here and be cautious if the trigger is hit.
05.02.09 09:26 #