Featured setups from Wednesday March 2, 2005 closing data symbol scan
Jump to: Long Setups | Special Situations
Notes for the Day
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.
Retracement or Pause in Up Swing / Up Trend
Gold
Currency fluctuations today on productivity and ECB rate announcement might forestall a move up here in the gold names; Gold itself is off 2.4$ at this moment—but its time to watch them closely each day for a buyable retracement. ABX remains one of the strongest performers (not pictured here).
NEM
AEM
Others
CNX – electricity producer, attempt to confirm old resistance as new support. If filled we want to see the prior tall down bar’s high broken and a strong close, if we are to hold overnight.
QCOM – first retracement after making an attempt at an apparent bottom. I would hold such a trade only if it clears the 3 day high and holds strong into the close.
Test of Top – Continuation
CK – has had a long run up; breaks out to a new high and this is the first retracement.
PVX – this is actually a retracement after the test of top earlier this year, and the trade setup is akin to the “grail buy”. When a simple retracement gets aged, we can’t simply lurk above just any down bar but need to look for reasons to believe the retracement may be over. Pull back to former resistance, perhaps now new support plus the hammer plus increase in volume suggests its worth stalking this one with a long side entry above yesterday’s high.
Special Situations
ACN – long – after a double bottom an apparent “bear flag” trigger allows us to stalk failure of same with a buy stop above. Hold only if solid profit at days end.
NVTL – long – an ugly chart, sunk after reporting mid-Feb. Pattern circled is a “piercing line candle found after a long period of decline – this can be a useful reversal signal, one that does not occur very often – and is worth stalking for a long.
05.03.03 08:57 #