What Works in Trading & Why: Part 3

Discussion in 'Trading' started by NoiseTrader, Apr 17, 2006.

  1. Part 3, is out-of-sample extension of the process discussed in "What Works in Trading & Why: Part 1" and "What Works in Trading & Why: Part 2" as it develops in real time.

    This example involves the potential for a emerging new tradable rally in Biotech in the coming weeks:

    For several days the tape has been painting a subtle emergence of bids and rotation into the Biotech sector.
    We have just initiated a new long in Biotech (BIIB and ABI) and we'll be stalking new adds in BBH or IBB, BMRN & PDLI.

    Review the weekly set of higher timeframe bidlines in the chart set included below.

    You can see why we’re keen on this sector, but selective. All four of these charts show aggressive offers into value-based bid lines.

    Look closer at your own daily charts and you see structural violations of bottoms and lower swing tops minimizing long side participation and creating a divergence between the perception of the probability of a change in trend down versus the actual probability of that same event.

    The BBH does show weaker relative support at the bidline, which may suggest a rally may be more tactical than strategic—implying a more aggressive approach to offering inventory back out into strength.

    The adverse scenario would be if bids collapse here and the bidlines on these weekly charts do not hold. In that case we would minimize our risk exposure and stand aside.

    PS: If you want to follow any intraday entries related to Part 3 in real-time type in your email at my blog and we'll send you info. Use the "Send me your BUY LIST" button, right-hand column at: http://www.street-noise.net/articles/
     
  2. Dr. Jekyl entered the laboratory this morning, but at the end of the day it was Mr. Hyde who emerged with new bids in hand...

    I did not like the morning tape in Biotech because the strong opening and bids had no tenacity -- that's the best way to describe it. When it became apparent that the market was going to break hard, I closed out the BIIB at 44.75 with a 0.8% profit on the position and stood aside for the rest of the morning session....

    I expected it to take a day or so before the smoke cleared but in the late afternoon the selling suddenly dried up and when the character of the market changed I re-instated the BIIB long at 44.74 w/43.77 STP and added to the Biotech exposure with a long in PDLI at 29.62 w/43.77 STP. I'm still holding the ABI long intact...

    If you want to get up close and personal (do this live) -- drop me an email at my blog and we'll send you the nitty-gritty...

    Use the "Send me your BUY LIST" button, right-hand column at: http://www.street-noise.net/articles/
     
  3. Please correct your stop.
     
  4. Sorry that's 28.37 for PDLI;

    I update that during the day if it changes and post those items in a nightly trade plan sheet.

    If you want me to email that to you, drop me an email at my blog:

    Use the "Send me your BUY LIST" button, right-hand column at: http://www.street-noise.net/articles/
     
  5. End of day follow-up 4/18:

    We made some adjustments to Bio sector long exposure reacting to two external risk factors:

    1) the spill-over effect of AMGN earnings (released after today's 4/18 close) into the Biotech group and
    2) that price indices are now (as of close 4/18) extended into overhead resistance --
    3) Not overly impressed with the tenacity of bids intraday in Bio sector

    Stocks in general susceptible to a near-term sudden relapse of anxious offers.

    Today we booked some partial profits, reducing Bio exposure by taking partial profits in long BIIB, ABI and PDLI. We may up that exposure, if offered the opportunity to do so on noisy intraday thrusts into reliable prices in the next 24-48 hours.

    Also, looking to possibly increase long side exposure in the health sector via MRK, ABT and GSK in the next 24-48 hours (see drug.zip) based on a variant perception between momentum sellers and value buyers. (Explained in earlier thread: What Works in Trading & Why: Part 1).

    I post a detailed list of the exact actions taken in stocks (and commodities) and my daily trading plan; simply drop me an email at my blog:

    Use the "Send me your BUY LIST" button, right-hand column at: http://www.street-noise.net/articles/
     
    • drug.zip
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  6. UPDATE FOR 4/19:

    HEALTH SECTOR: I Lightened up on Bio yesterday (4/18) anticipating some anxious offers today in that sector spilling over from AMGN & GENZ—that’s pretty much what happened today, but PDLI and ABI held up well enough to hold the core longs....

    I tightened up my stop in BIIB and closed the remaining long out at a bit above break-even (BIIB may still work higher it’s just a bit too mired in congestion). Both BIIB trades were profitable, but small change.

    Still stalking a pull-back in BMRN which is drifting higher and an add in MYOG....My sector analysis continues to show PPH, BBH and IBB sloshing around here at a price level where value buyers are accumulating longs, but we need to see that high-conviction order flow not the tentative bids we’ve been seeing.

    A trade I like right now is long HOT for a tactical trade...it’s had a big-time price rejection bar on 4/10, but well-bid in the higher timeframes...It has been congesting after a retracement back into the daily bid line and was well-bid today -- I bought it near the close at 54.93 w/loose stop at 52.97. Will adjust that ASAP.

    I think it’s one of those “buy high, sell higher” stocks -- I’d like to see it get tight right here for a day or two...

    I also like CMG for similar reasons...you can see the relevant dail bidlines (see cmg and hot files, below). Stalking the CMG but nothign done yet...

    ================
    I post a detailed list of the exact actions taken in stocks (and commodities) and my daily trading plan; simply drop me an email at my blog:

    Use the "Send me your BUY LIST" button, right-hand column at: http://www.street-noise.net/
     
  7. Here'sa the CMG chart...
     

  8. Don't take this personal Mister NoiseTrader but your complicated service really makes me appreciate the easy to understand service that I use. Maybe I'm just a simple man but one thing I've learned in all my years is that simple is almost always better. But good luck with your 28 years of 12 hour a day tape reading. Your eyes must look like Marty Feldmans,,LOL.
    ...Rennick out
    :eek:
     
  9. None taken -- our win-ratio, posted live to the conference, is currently running over 80% and we work hard to achieve that. We buy or sell, take partial profits and adjust stops...and we never waffle....that's as complicated as we get? but most of our clents are indeed trading close to the market...

    Please give me an example of a trade that is complicated? or maybe you mean the logic seems twisted or convoluted -- that I would probably agree with 100%. I don't conventional thinking works in markets (unless its a broad-based tight bull market)

    I believe one should: "Do more of what works, and less of what doesn't" -- whatever that may be -- What service are you referring to that's ringing the cash register for you?

    I'd like to see what "easy to use" looks like...maybe I can learn to improve on what I am doing and communicate better.
     
  10. You seem like a stand up guy,thanks for a response that I could understand. I'd tell you the name of the service I use but I don't want to get accused of being a spammer, know what I mean.

    ...Rennick out

    ps. That was a skyhook from mid court, SWISH nothing but net.:D
     
    #10     Apr 19, 2006