Featured setups from Wednesday March 30, 2005 closing data symbol scan
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Notes for the Day
- Haven’t quite got my workflow squared away yet, but am making improvements and hope to have swing trades out the evening before on a regular basis, shortly.
- QQQQ longs from yesterday should have break even stops in place. If price comes all the way back there its more then likely this rally is over, but we’ll monitor this intraday and report as needed.
- 10525 is a key support level for YM; if broken and price starts to trend down below there, I will likely look for shorts intraday even while keeping an open mind about the potential for at least a multi-day bounce. Until price rises further today the market remains in danger of failing and continuing the down trend. We’ve been there, done that, and have a T shirt…
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 Range low or Bottom – Reversal
APA – check the oils across the board today, after yesterday’s big sell off in oil and reversal (crude is up 2% pre-market) these names are all likely to push up at least initially. Clearly price has become very volatile here so our goal must be to get to break even stops as soon as possible.
ECA – oil and nat gas – declining wedge as well as retest of range low
CVX – integrated
VLO – sour crude refiner, speciality capability has supported price better here, not to mention narrow gasoline production spare capacity in US
ATML – lots of the low-priced names may see speculation return if the market can hold yesterday’s gains and advance further today. Here’s one that on the weekly has been moving sideways for some time but a local test of bottom gives at least a safer opportunity to attempt a long.
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
CCE – Things go Better With Coke? – carry forward, this is the last day I will stalk it.
Test of Bottom – Continuation
WMT – weak bounce to overhead resistance
Special Situations
QLTI – long – one day only, disclaimer I already own this from lower prices. Sometimes when price makes an exhaustion bottom price will not fully retest the lows – so this harami here presents a 3 inside up scenario, if triggered I would hold only if solidly profitable by days end, ideally closing above Tuesday’s high or higher.
IBM – long – bull flag under resistance. If filled price must push up significantly higher and close strongly before considering holding overnight. Otherwise it will again appear on our short list tomorrow…
05.03.31 08:11 #