Here’s How Preparation Pays Off
The opening minutes of trade can be fast
and furious. To take advantage of what many consider to be “emotional
order flow,” you have to be ready. There are many strategies out there, but I think
you’ll find that one common element in trading any strategy successfully, is
preparation.
Proper preparation allows one to act when a stock
is at a decision point, rather than reacting after the fact. One of the ways
that I prepare each and every trading day is with my list of High and Low RS
issues. I track these issues each morning for potential follow thru action in
the direction of the established trend. To be quite honest, the majority of
these stocks are discarded in the first 10 minutes of trade as patterns in that
day’s trade fail to continue in the intended direction. That’s fine, because the
real secret is not being 100% correct on the next day’s action in my selected
stocks. The key is zoning in and acting on those issues that are still
demonstrating underlying strength, or weakness, within the parameters of pattern
setups, and risk versus reward.
Friday’s session in the early going gave us one
such opportunity that met my trade criteria.
09:38:53
Intraday
Setup Alert
From the Nightly Daytraders
Report Lexmark (LXK)
is breaking out of a downward sloping High level extended Slim
Jim. The stock is up .30 at 67.05.
From the above chart you can see why it made my
list of Institutional Favorites in
last night’s report. As a matter of fact, we
were able to put up a very nice intraday alert at lower levels in Thursday’s
trade. Friday morning, the early market tone was negative, and Lexmark was
dragged down slightly with the broader indices, but then a funny thing happened.
The stock got serious once again, and immediately reversed back into the pattern
that qualified it for my evening report. It was during that same price bar, that
I got serious as well, and realized the #$#@$ and giggles were over, and it was
time to act! How’d I know to act? It was simply an act of preparation.