I was looking at EMC after today's close and noticed that it might fit into Tony's filter for the 'sky scraper' and I wanted to see if Tony or Sniper can answer a few questions. First of all, when and where do you enter the trade? In this example EMC is offering a resistance level at $13.60 appx. Do you enter the same day (10/9) anticipating a lower close (which did happen) or do you wait for a confirmation until the next day? Also where do you place the stop in this example? I would place it around $13.80 because anything around that area would mean resistance has been broken. Finally, the target would be $10.50 giving us a rather large risk/profit ratio. Is this correct? Thanks for feedback.
Babak, I was looking at EMC after today's close and noticed that it might fit into Tony's filter for the 'sky scraper' It wouldn't be a Sky Scraper after today's close, but it certainly would have been after Monday's close (4 up days). According to Tony's system you would have considered entering after it fell below 13.35 (Monday's close) which it did on Tuesday, placing a stop above the high (13.48), or an appropriate intraday high if that was too far away for an acceptable reward/risk ratio. the target would be $10.50 giving us a rather large risk/profit ratio. I find targets to be somewhat subjective, but a good argument could be made for 11.80 which was the low of last Friday. I suppose you could also make a case for 10.65 (Wed's low) but I'm not sure it's realistic. Also note that volume was below average today so that would be a factor as to how you might play the swing.
Magna, looks like you know my system very well! Thanks for the answer. Babak, the entry is triggered intraday just as Magma suggested. Stops are placed either above today's high, today's open, yesterday's close or other logical intraday resistance level. Depending on risk/reward and time frame, I would utilize any of the above. The Maximum stop loss would be placed above today's high, so I use that often in my examples, but I would use any of the above in "combat" For more help on this, I have NEW case studies on this page: http://www.tonyoz.com/trade.htm I suggest starting with 9/24 and finishing with 10/3. As to price target on EMC, I am attaching a screen shot of the calculator. You can download it for free at http://www.tonyoz.com/ozcalc.htm <b>AFTER 10/21</b> I would use either the Conservative or Neutral Bear Market Approach. If EMC was forming the sky scraper setup at the 50 DMA or Upper Bollinger Band and I had a longer time frame in mind, then I would use the Aggressive Approach which calls for a lower low. I just noticed that EMC had a beautiful Bottom Fisher setup after a doji. Absolutely gorgeous on 10/3. Well that was a good day for the market also. BTW, if you are a RealTick user, I have some new pages for download at http://www.tonyoz.com/download.htm And www.tonyoz.com should be 99% operational according to my dear brother the Webmaster We also included a link to this message board on the Resources page. Finally, I have a financial interest in the TonyOz Scanner and in www.tonyoz.com, so I feel very awkward about discussing these products on the boards. In fact, many of you have noticed that once my first book was published, I left the message boards. And it's not because I have nothing to contribute, but it is simply because I never wanted to be in a situation in which I would answer a question in a bad manner. For instance, "Mr. Y, the answer you are looking for is in my book on page X." I hope you can see where I am going with this ... Anyhow, if you have any questions, please email me tony@tonyoz.com If I offended anyone, please accept my apology. Trade Smart!
Tony Oz, I for one am not the least offended by your contributions and frankly I don't know how anyone could be. Your website has useful explanations of these patterns for anyone who is interested. I am neither endorsing nor knocking them, as I haven't tested or used them, but I do appreciate your willingness to help people here.
Tony, I also very much appreciate your contributions, so don't be shy. I saw you recently at the Anaheim Expo, spoke to you briefly, have read The Stock Trader and Building Blocks, and am clear that your intentions are honorable and you are committed to the education of traders. Feel free to contribute and post whenever the mood strikes you. And TRADE SMART
I have a question regarding the setup from 09/24 (http://www.tonyoz.com/nbty924.htm) - from a visual standpoint it looks great - but how would the scanner find it since the last day has not been a down day (green candle) ? I hope I'm not getting something wrong here Greetings from Austria, Harry
Harry, how would the scanner find it since the last day has not been a down day (green candle) Look again, as it was a down day. A green candle simply means the close was above the open, and it says nothing as to whether it was an up or down day. This is referring to the green candle on 9/21. The green candle on 9/24 was the actual trading day (when the scanner picked up the pattern), and it was an up day.
Thank you Magna for your explanation - but how is a down day defined ? "lower low and lower high" ? I don't have the scanner yet (it takes a while to get it in good old Europe ) so I can't check it there. Harry
Harry, how is a down day defined ? "lower low and lower high" ? A down day is simply when the close of today is lower than the close of yesterday. Like I mentioned, it can either be an "up" candle or a "down" candle, all depends on where the stock opened.
First, AAAintheBeltway and Magna, Thanks for your kind words. Magna, WTG! You answer all the questions perfectly before I even have a chance to reply. Cheers Harry, Magna answered the questions perfectly, so there is nothing for me to add other than to restate that I actually found the setup on the day the reversal candle was formed by using the Knock Down scan http://www.tonyoz.com/knock.htm if you look at the example of ORCL http://www.tonyoz.com/9weeks.htm (The second chart). It is also a Green candle, but a down day. I used the reversal strategy outlined in the book (which I signed to you today, and should be shipped tomorrow) to enter both setups. I encourage you to study that strategy carefully before you use it. Effective Stops are crucial! Next, I took a look at EMC. It hit a low of 11.87 - meeting the Conservative price target of 11.95. However, I would have most likely lost my position early in the morning when EMC traded above yesterday's close following its intraday high breakout. I might have entered the trade again, but I am not an NYSE trading guru, so probably I wouldn't have. Regardless, EMC had another down day (almost 4%) while the market was very strong. Hitman, I read your journal entry for today, and I have to tell you that I missed three entries this morning and had to give up (had to go to the dentist at 9:30AM PST). When I came back, I missed another two entries on the pullback. So it was a very frustrating day for me. Big day for the market, and I made ZERO. I guess it's better than losing There is always tomorrow... Trade Smart!