Featured setups from Monday December 6 closing data symbol scan
Jump to: Long Setups | Short Setups
Notes for the Day
Keeping in mind that the indexes remain within easy striking distance of the recent top, until a confirmed break of the upper most significant intraday trading range occurs, we have to assume that the market can still power up. Truly the market is on the knife edge here of passing or failing this significant test – that’s why we are swing traders, to exploit such times.
I’ve posted a number long and short trades; in TrendVue Trader Talk we shall bring more up once direction is clear (which may not be today…).
Entry and Exit Strategies
(Repeated for new clients)
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 Top – Continuation
SMH – semiconductor ETF – test of range top here, buy stop or alert on break of yesterday’s high. Move to break even stops asap, even intraday – do not allow a minor wiggle up to reverse and sink deep into yesterday’s range.
AMAT – semiconductors – follow SMH rules.
TQNT – semi
QCOM – this was a great pick of ours a number of days ago – swing traders will have taken profits on Friday at the test of top. Now another opportunity to attempt a long is here; caution should be paid to the resistance at the top. Also, if still long QCOM a break of Monday’s low should shake out any remaining swing traders who may have been hoping for more.
BCE:C (TSX) – frankly this could go either way – two inside days or harami in a row and a possible bear flag. This one is probably worth watching with both long and short in mind.
CLS:C (TSX) (Also CLS:NYSE) – inside bar at a test of range high and ascending triangle. Buy stop 18.91, initial protective stop if filled 18.48 but do move this up quickly.
G – consumer
BBH – biotech ETF, a safer choice than an individual name like ABGX if planning on turning a swing trade into a medium term or longer hold.
ABGX – biotech – following a 2B test of bottom in early November has pushed up strongly. Buy stop just above this small retracement; do not allow price to sink into the range below.
Pauses in Up Swings
LTXX – still intact upswing.
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.
Test of Bottom – Continuation
KSS – retail – flirting with failing its range low – find an intraday entry for a short if the 2 day low is broken.
BBBY – retail – if this doesn’t trigger today keep it on the short list for another 2 days.
JCP – retail
04.12.07 09:29 #