Featured setups from Thursday December 9 closing data symbol scan
Jump to: Long Setups | Short Setups | Special Situations
Notes for the Day
No matter how positive yesterday was, be prepared for failure today until / unless it becomes perfectly obvious that markets are heading higher. If possible, do an intraday entry after the initial trigger, after the first minor retracement and only if price proves itself by going up through the trigger again.
What we must avoid today is being stopped in on a minor wiggle up, only to see price reverse later in the day or Monday, so demand anything you get long on turn into a nice solid profit by day’s end or bail it.
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.
ETFs
If a real market turn back up is upon us, its handy to gain exposure in part through the use of ETF’s as it reduces the pressure for us to locate stocks that will perform as we’d like.
IWM – Russell 2000 has been outperforming
SMH – semiconductors, test of range bottom.
Retracement or Pause in Up Swing / Up Trend
CCL – still in an uptrend, minor pull back to the “breakout”.
http://www.trendvue.com/charts/2004/12/tv20041210–06.gif
AMT – possibly has set out a narrow range now.
SKS – specialty retailers are one of the few retail groups retaining a little strength but caution just the same. I am not a fan of the dark cloud cover last week…
LRCX – appears to be holding support here. Hold only if closes strong.
ARRS
Test of Bottom – Reversal
UVN – piercing line candle here, buy stop just above and demand that price close very solidly in your favour and above the two day high preferably. Check news on company before holding at the close, something I always do on new trade entries.
PAAS – silver, caution.
Test of Top – Continuation
CNET – day traders seem to have gotten ahold of this one, caution.
MEL
GNA:C (TSX) – low volume. I’ll be looking through other TSX names this morning in TrendVue Trader Talk.
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.
NOTE I have not posted many short trades here because frankly there are not that many clean setups. THIS DOES NOT MEAN MARKETS ARE GOING UP AUTOMATICALLY.
If indeed markets reverse hard, we’ll want to use ETF’s like DOW, SPY, XIU:C, etc for exposure on the short side, plus we’ll find some very weak individual names as required.
Retracement or Pause in Down Swing / Down Trend
BBBY – retail
Special Situations
RIMM – long – caution on the long side as it remained weak yesterday. Let price prove itself to you.
CLS – long – very tricky here; rising wedge has a short target, marked below, however the hammer yesterday may have arrested the decline and thus is a long candidate today.
CLS:C (TSX) ditto!
PLMO – either direction, probably long – use the intraday entry technique on this one – do not let it move up and reverse on you. Price MUST clear the recent 2 day high before considering holding overnight.
04.12.10 09:25 #