Referring to your question on my 2nd intraday trade on QLGC yesterday..... I was not looking for a swing trade and my exitting decision was derived from stochastics and L2. The resistence you mentioned of 51.50 - 52.50 would be accurate if I opened the position as a swing trade.
The market has been largely trendless for month undergoing a series of short up and down swings. Having broken support the market appears headed lower BUT the market has a chance to refuse a trend. Watch resistance carefully on the Dow, S&P and Naz. All have potential bottoming patterns. The Dow has an inverse head and shoulders, the S&P and Naz have double bottoms. If they rally through resistance this will signal that TRENDLESSNESS continues to rule. Pull up a S&P 500 - 5 day, 15 minute chart (candles) - potential double bottom @ 1,120 Pull a Naz Comp - 5 day, 15 minute - potential double bottom @ 1,770 These are not recommendations: TLAB - Short - Failure to establish a base at Feb lows confirms major down trend. Target @ $8.20 Stop @ $10.15 ACI - Buy Wed. strong breakout and retreat to support at what was a triple top spread from late Oct. through early Jan is an opportunity to buy. Target @ $31.00 Support @ $22.25 FBN - Short (if you can locate shares) Long term trend has temporarily topped out Target @ $ 33.25 Stop @ $37.25
I wanted to talk about Gap strategies and what I have used vs. what others may use. This could turn out being another thread I should have created. When the market begins a Trendless cycle this is a good time to switch strategies if your current strategy is not profitable. Over the years I have experimented with many strategies some of which have worked for a month or a day or NEVER. One that I always go back to in this type of market cycle is playing the Gaps. There are variations of this strategy that I'm sure many of you will agree or disagree that work. I have tweaked with the details and parameters of this strategy and query builds over time that I have formulated. Basic strategy: Run a query at or a few minutes before market open to look for stocks that have gapped up and down based off of previous days close. Now is where different people's interpretations of this strategy come into play. First Style: Wait a few minutes after the open and let the amateurs send out their market orders chasing the stock while going WITH the gap. Once the stock appears to reach a top or bottom, use your indicators to do so, I will FADE the Gap....meaning for example. MSFT opens up $2.00 from previous day's close to $57.00 and starts to run to 57.25, 57.50 and then tappers off. This is where you open your SHORT and fade the gap. Same for Gap downs when you open a long. You then use your indicators, L2 and price objectives to implement your exit. I personally like this strategy but you must be ready for a volatile ride especially when volume on the gapped stocks are ripping. 80% of the time the stocks gap due to news which is the only ones I play. If no news is out I won't touch the stock. There's a good chance MMs are running the stock up or down and will hand you your ass real quick! I stay away from Listeds unless they have strong averge day volume with consistently tight spreads. Second Style: (I use this one more often) Use your Gap Up or Down list and watch these stocks at market open. Use the 10:00 rule, which is don't open a position on a gap play until 10:00 est at the earliest. I have found that waiting until 10:30- 11:00 has been the best time frame on average but that is something you will need to decide for yourself. More importantly, I wait for a channel to form intraday during this time frame before I open the position. Here is the criteria that must be met in order to open the position. IF the stock is near, at or settings a day high then open the position going WITH the gap. Example: MSFT gaps up $2.00 to $57.00 at market open. At 10:45 est MSFT is trading at 57.20 which is almost at a day high then begins forming a channel and ticks down to $57.05, you go long. Now the time frame to exit the position differs depending on your price objective and how the market reacts intraday. What I like about this strategy is that the stock gapped for a reason (news, ect so the stock will generally not be as sensitive to market movement as other stocks that are trading based solely on technical indicators and indices. If the criteria is met on a gap up position and you go long then later in the day if bad economic news is released, your position might move against you a tad but not as much as the average stock with no news for the day. In regards to an exit time frame I will hold the position through lunch and begin watching closely around 2:00 est. Obviously if the stock is still settings day highs going into the close you want to hold the position for most of the session and close before the bell. This is a good time to implement a trailing stop with a decent cushion since these stocks are a little more volatile than normal due to the volume. Establishing stops is solely based on risk tolerance. When I refer to my Gap Lists I mean that I use a software that I can build particular queries and filters to select certain stocks that meet the criteria I set. Example (Gap Up): Filters: Volume greater than 100,000; Open price is greater than close; only stocks on NASDAQ; gap is equal to or greater than .50; search Gap list. This query will scan every Naz stock that meets this criteria and populate my screen. Then I print the stocks and compare the change in price from market open then at 10:00 then to the time I decide a channel has formed and I think the tiem is right to open the position. The example I used above also applies to the Gap Down strategy as well. Typically this strategy only works in TRENDLESSNESS markets so it's important to pay attention to current market cycles and be able to interpret rather quickly when trends begin. If anyone uses this strategy or a variation of please comment on your success and any suggestions that you have.
TODAY'S EXECUTIONS: 11:06:06 .PQODY SLD 20 0.5 10:45:41 TLAB SHRT 3000 9.68 OPEN POSITIONS: Short MSFT 2000 56.85 +0.96 Short TLAB 3000 9.68 +0.01 Long PALM 5000 4.01 -0.46 Long MO 2000 53.52 -0.99 Long .PQODY 20 1.60 -1.15 CLOSED P&L: ($2,200) OPEN P&L: ($4,550) TOTAL CLOSED P&L: $36,759
Major Intermed. Minor Sector Up Down Up Down Up Down Capital Equipment 3 0 1 1 2 0 Consumer Durables 3 0 0 0 0 0 Consumer Non-Durables 2 1 1 0 0 2 Energy 2 0 2 0 0 0 Financial 5 0 0 0 1 0 Natural Resources 0 0 0 0 0 0 Transportation 0 0 0 0 0 1 Utilities 2 1 0 0 0 0 ____ ____ ____ ____ ____ ____ Totals 17 2 4 1 3 3 I'm not sure if the board reads these posts on my mkt commentary and swing plays. Should I keep posting this type of info or am I creating unecessary reads? Thanks.
Some how the format was squeezed together. Each Sector has a MAJOR - INTERMEDIATE - MINOR trend Within each Trend is a UP and Down number referring to how many stocks within that sector are in up or down trend. Hope that clears up the messy table.
Hey Seanote, yes I have been following your posts and I appreciate your time & effort in doing so. I am still new to trading Nas stocks, and as such do not have a lot of information to contribute. Is it possible for you to share some of your strategies, for stock selection and entry premises? I am utilizing the methods I learned from Jay @ undergroundtrader, and am having some success. Essentially I chart the Nas futures as a lead indicator. I use 5 & 15 min moving averages on 1 & 3 min charts with stochastics. This is a scalping technique that yields a minimum of .10 and can be as much .25. These methods were producing .25 to .60 & up, but conditions since mid-January have greatly diluted the potential for profit. I do find it encouraging and inspirational reading about other traders and their results. Thanks for posting. --arky