Featured setups from Thursday March 31, 2005 closing data symbol scan
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Notes for the Day
- Focus today is protecting long and short positions already on-going
- Golds and oils from yesterday – get to break even stops, particularly in oils – there is no reason for these to come back. Gold – premarket is trading down marginally and the USD has gained a little. Watch the sector carefully. I did not buy into the sector yesterday, am hoping for a minor down bar today which will leave an ideal long entry for Monday.
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
QQQQ – disclaimer, I’m already long QQQQ off an intraday entry mentioned in Trader Talk two days ago, and am still holding with a break even stop. QQQQ ( and all the broad indexes) can be stalked both long and short above and below the narrow range or inside bars present. In the case of QQQQ in particular the test of bottom is still on-going.
Russell 2000 Index – included here to show how to deal with RUT and its ETF, IWM:
First, note the trendline break. Unskilled buyers frequently cry out “its a breakout!” when a trendline like this is broken, and buy, only to find price sink back below. We can exploit this tendency and wait—IF price pulls back the first trade I will look for is a minor down bar today over which to put a buy stop on Monday next week. We can also stalk the 2 day high today for a new long but must demand that price move up strongly in our favour today if triggered.
IWM – matching ETF for RUT
Retracement or Pause in Up Swing / Up Trend
AMAT (perhaps also KLAC) – big outside bar, but we should still stalk a long. One benefit of our approach is that it costs nothing to let price come to us…
KLAC – see AMAT comments. SMH etf might be used as a proxy as well.
Test of Top – Continuation
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
DIA – Dow 30 ETF – one day only, monitor the low of yesterday’s inside bar and prepare to short or use this as a trigger to consider exiting new longs. We want to avoid making decisions based on a minor wiggle through either the high or low of these inside bars. We also must keep in mind that since yesterday’s trade held within the upper 1/3 of the range of Wednesday’s tall up bar, we should give the benefit of doubt to further upside, at least for today.
That being said, in the early going of a bounce above a major retest which was not completed (2005 lows) we have every reason to be a little aggressive on the short side and be ready to capture and exploit failure.
Again DIA inside bar can also be used to lever a new long – hold only if price closes quite strongly in your favour.
SPY – similar comments to DIA and QQQQ. I’ve marked overhead resistance – even if price continues up today we should not have our expectations for a lasting bounce be set to high until price starts to trade above 119 and HOLDS there. My approach is to be long and not scalp minor profits – so I will not be moving profit stops up on new longs until resistance is hit—I am quite content to let any recent entries stop out at break even. At such a time my primary goal is to protect good entries, not scalp minor profits. Another approach that marries the best of both worlds is to take profit on 1/3 or 1/2 of your positions if they stall in the days to come, and let some run longer just in case this bounce turns out to be more than a failing rally in a new bear market.
Test of Bottom – Continuation
COF – financials – stealth bear flag forming
BEAS – stealth bear flag forming
FDO – retail – weak bounce just inside the range, perhaps may pull a WMT which delivered a nice short trade yesterday. Hold only if short closes below Wednesday’s low.
Special Situations
ISSI – long – after breaking through the trendline earlier this week has pulled back – taking one stab only at trying to capture a move back out of the triangle and up.
05.04.01 06:48 #