I'm a bit late posting this and I'm already short at $39.50. I'll blow it for a loss on a hard push with volume over $40.00.
Though my primary focus has been to short resistance / buy support for the better of a year, I do buy breakouts / short breakdowns from time to time. This is a monthly chart. Not many out there that look like this.
Did you sell AMGN at 52 - 53.50 res this time around? It seems like it can't break out of that range. nitro
Nitro, The AMGN chart is an excellent example of the waves that normally occur following a major breakdown. First, there is the sharp selloff when key supports are violated. Second, there is profit taking by traders who are short as leading stocks near support areas. This profit taking wave occurs as a result of scalpers / margin rats who trade bounces off supports and buying by shorts to cover positions which they shorted at a higher level. These profit taking waves often result in counter trend rallies back to or slightly above the support that was initially broken. Third, in a normal trend and after the initial breakdown and profit taking wave, you see a continuation of the trend. This wave is less violent but stronger and longer as the shorts become more confident and the margin rats step back. In a nut-shell, this means there are 3 waves.....breakdown (hard and fast), profit taking (rallies back to resistance) and then a continuation of the trend (less herky jerky than the initial breakdown). By definition, AMGN has been in the profit taking wave the past few weeks but has faded a bit off of the recent highs. Personally, my favorite shorting spot occurs in wave 3. To answer your question, I'm not short AMGN....not because I don't like the setup. My long term plate is full at the moment. Happy trading.
Just wanted to say thanks for a great thread.. It is really helping a newbie like myself learn a bunch. I really do appreciate the time if takes you to post here If I may ask, what are you using/what do you recommend to use in order to scan for all these stocks you find? Simply plugging in stocks in a chart looking for support and resistance seems it would be more time consuming than anything else.... there must be a faster way to find the stocks you select Thanks again -Matt-
Matt, The only software I personally use is TC2000. Since I haven't used another service, I can't compare it to anything. However, it does everthing I need it to and I doubt the price can be beat anywhere else. People ask me regulary what type of scans I use. Other than a simple inside stick scan I look over on a daily basis, the rest are very basic. If I've learned anything in my 3 years of trading, it's that there is no holy grail to this nonsense. It just takes a lot of work....for me anyway.