Going long on DYN

Discussion in 'Technical Analysis' started by Randall, Aug 20, 2002.

  1. Randall


    First of all let me apologize for the length of this post, but I wanted to get an opinion on my strategy.

    this is my first post on this site so let me give a bit of background. I just started trading two weeks ago and I find it really interesting and I actually seem to be quite good at it. I'm not quite sure what the rules are on this board so i dont know if im supposed to discuss strategies on specific stocks. Well anyway heres whats going on:

    Dynegy gapped up like 60 cents on monday and its close was lower than its open. Its slow stochastics also crossed below the MA and vol indicators were bearish. My plan was to short at the open on tuesday (today). Unfortunately my total equity is 7100 dollars and I made three trades in one day two fridays ago marking myself as a pattern day trader and losing my margin privileges (GRRR). Well I would have made a thousand today but thats ok. So I decided to go long on DYN.

    First things first: I had to find a entry price. I used a 20 day chart, complete with bollinger bands and a 50 day MA against RSI, slow stoch, and MACD. From the period august 8th to august 12th, a similar pattern that is occuring right now occured. During that period the stock went from a high of approx. 3.30 to approx. 1.30 The MACD and RSI confirm the similarity of the patterns, with only one difference, the MACD went approx. half as high on monday as it did during the pattern on august 8th. The RSI is also about twice as close to eq. right now as it was on august 8th. From this logic I am led to beileve that the decrease in price from mondays high of approx 2.4 will be half the decrease that happened from august 8th to august 12th. This is approx. 1.00 So my entry price to go long should be somewhere around 1.40 I expect this to happen sometime this week. I say approx. for my entry price for a few reasons but the main one is obviously there is no gaurantee of the stock hitting 1.40 , so i will use as my indicators to go long as the MACD crossing over its MA and the price chart touching the bottom of its bollinger band. I will also look for floundering bearish vol. and a close price either above or very near to the open price.

    My risk for this trade will be no more than 500 dollars, and i will exit the trade on a trailing stop basis.

    Thansk for the time. Anyone think I'm doing ok in my analysis for a trader thats only been in for two weeks ? BTW i have a 80% win rate right now, with winning trades on shorting CSCO, going long on AMAT, going long on SEBL, and a losing day trade shorting AMAT
  2. Randall


    12:12 pm on wednesday august 21. DYN opens at 2.06 and is trading at 2.12 right now. hmmm.... we'll see what happens at the end of the day. If the stock doesnt close lower than 2.06 is my theory shot?? on another thought i couold have intraday traded DYN and made a couple hundred dollars oh well live and learn.