Here’s Why It Really Was ‘Too Easy’
The TrapDoor reversal play has always
been a classic at TradingMarkets.com. It’s a well-defined play that looks to
exploit temporary imbalances in supply or demand usually caused by some
attention grabbing news that catches everyone off guard. They happen every day,
but some are better than others. What I like to look for is price action testing
key technical levels, or even slightly breaching “the zone,” off what I consider
to be unsustainable momentum or thrust.
On the heels of some “very disturbing” news from Texas
Instruments (TXN) and Cymer (CYMI), the semiconductor sector (SMH) was well
offered in the early going. I was also watching Silicon Labs (SLAB), due
to a downgrade, but it wasn’t until I scrolled through my sector list of related
stocks that I became truly excited by an Opening
Reversal prospect. It was Maxim Integrated
(
MXIM |
Quote |
Chart |
News |
PowerRating) that finally
caught my undivided attention.
Unfortunately, due to a technological snafu, I
couldn’t post the impending setup to the Live Alerts, but I did the next best
thing, by keeping the TM
chat room up to date on the situation in Maxim. Maxim, was delivering a
classic TrapDoor right into an awareness zone of technical price supports based
on the daily chart. With the established lows of the formation, the stock
actually penetrated the supports slightly. I personally like this action more
than a test that doesn’t pierce the prior lows, as quite often it’s all that’s
needed to shake out the “weak holders'” before a powerful intraday reversal can
take place.
You can see from Maxim’s chart, that once more,
when trade logic sets up with a classic pattern at key price supports, the
opportunity for “maximum returns,” was just too easy to to not get involved.