Featured setups from Tuesday March 8, 2005 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
- Tests of tops must always be watched very carefully
- So far, this pull back remains above where we first expect support to come in
- Therefore, until or unless support breaks and a clearer short opportunity arises, we’ll lean to conservative long strategies…
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
NTRS – first pause after a big break above the downtrend line. Follow up for one more day if not triggered today.
XLF – Financials ETF – single down bar in still-intact upswing – today only. If it pulls down farther today we’ll want to see it deal with that rising trendline before considering again.
IP – paper showing some strength lately (DTC:C, A:C, NS:C as well) – first pull back. Follow up one more day provided the base of support marked holds.
Test of Top – Continuation
MMM – any test of top is also automatically a short candidate; but since this one has pulled back only a minor amount we’ll want to stalk it long first. The short-side opportunity is to stalk the first bounce and look for failure to sell.
DIA – Dow 30 ETF, same comments as MMM
SPY – S&P 500 ETF, same comments as DIA
Short Setups
We will discuss these in TrendVue Trader Talk today.
Special Situations
High Risk
QLTI – long – disclaimer, I bought this close to the LOD yesterday and have a smallish open profit. Looks like selling exhaustion – I am prepared to dump it at the open if it acts weak at all.
EYET – QLTI’s competitor – note the gap down – often this marks a swing end. Trading well below IPO, something sure is wrong with this stock and the pair of them really stink!
05.03.09 09:27 #