Featured setups from Monday March 14, 2005 closing data symbol scan
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Notes for the Day
- Am stalking long and short today – breaking and holding of either the high or low of yesterday will be the signal. Price has pulled back as far as we normally are willing to tolerate on a test of top—remember the test of top recently?
- This backing and filling is all part of determining if the intermediate term direction (up) is changing or not. All consolidations end eventually and as this current period is now aging to the point where a breakout and continuation is more likely than not, we have to be VERY alert.
- Gap up at the open – first task is to look for a buyable retracement, and it may be very short in duration.
- Further ideas will be discussed in TrendVue Trader Talk
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
NEM – also see comments on Gold re ABX
Test of Top – Continuation
DIA, SPY are all at the critical point where they must bounce back above resistance ASAP or we will have to conclude a trend change has taken place. As noted above, we can stalk these both long and short based on where price heads and remains.
ABX – keep an eye on the gold names for new longs or to tighten stops. Some of the stronger names are trading at or near 52 week highs. So far ABX remains a relatively simple test of top long continuation setup. Gold is up marginally following the TIC report this morning – keep a close eye intraday and do not hold if price weakens later.
Short Setups
General common strategy: Unless noted otherwise, place a sell alert at or just below the low of the setup bar, and look for the first failed intraday bounce after the low has been broken. What we are looking for is price to push down, bounce a little, and fail again – this is where we want to get short.
Retracement or Pause in Down Swing / Down Trend
EAT – may bounce more – follow for another day or two max.
Special Situations
QQQQ – not trending at all, and having broken below a triangle, we only want to swing trade QQQQ if we can trade on an intraday-basis. Occasionally when price breaks below a triangle a very good bounce results if sellers feel trapped – this is what we’ll be looking for if stopped into new longs here. Anything less and we should take our money and run.
QCOM – intraday traders only – rising wedge is frequently a bearish pattern however given the single down bar in a still intact upswing, here’s a good opportunity to attempt to catch what might resolve into a bullish running triangle. Stops / alerts just above yesterday’s high – monitor the first pull back after trigger and buy, moving to a break even stop ASAP.
05.03.15 09:18 #