Accepting Flexibility As An Important Tool
We come in each and every day with our
lists of potential longs and shorts, but that doesn’t mean that we can’t take a
solid ‘swing’ if ‘they’ mix it up a bit in the next day’s game. Personally,
I don’t mind switch hitting (with stocks that is), if by the time I step up to
the plate, the stock is showing signs that a new game is in play.
There are those times when a stock is sending
mixed signals on the daily chart that I’ll look for trades from either side of
the market. For instance, when a High RS stock gets ‘batted down’, or clubbed,
but is still defined by the larger daily chart as an uptrend, I try to be as
flexible as possible. For me, this means looking for the intraday patterns that
lend themselves to flexibility. Consolidation patterns such as Slim Jims and
triangles are great for this, especially when you can make a technical argument
as to why either continuations or reversals might produce a strong move out of
patterns notorious for explosive action, as soon as the stock breaks above
formation resistance or support.
Genprobe
(
GPRO |
Quote |
Chart |
News |
PowerRating) was one such stock
that flexibility seemed appropriate. The stock was selected as a potential short
from my Nightly
Daytraders Report, but by the time I saw something truly interesting setup
in the next session….well, let’s just say it’s a trader’s prerogative as well.
11:56:00
Intraday
Setup Alert
From the Nightly
Daytraders Report, Gen-Probe (GPRO) has
formed a low level intraday Slim
Jim. The stock had been listed as a potential short, but with tightening
intraday bollinger bands on the 5-minute chart, and the fact that the stock is
still technically a High RS issue, one might consider playing the pattern breach
from whichever side the stock ultimately breaks from. Currently, shorts might be
considered below supports of 56.72, and longs above 57.20. GPRO is down .77 at
56.98.
Truth be told, this was a dramatic example of
price exploding out of a well-defined pattern. More importantly though, when the
trade with edge exists, ‘you have to be in it, to win it’…bottom line,
especially when the bottom line is a classic consolidation like our friend,
Mr. Slim Jim.