Here’s Why I Focused On This Reversal
I’m an ardent believer in
reversal plays for both longs and shorts.
When it comes to shorts, and those stocks
that are in need of profit-taking (while the news is still good), I look for a
couple of things to key off of. First, the daily chart has to be telling me that
the stock has found a high by way of pattern and resistance. Secondly–stochastics,
MACD, or momentum divergence is sometimes useful for extra confirmation.
Once I have enough daily evidence to focus on one
side, then it’s a matter of drilling down the action into the intraday trade. In
yesterday’s report the focus was on the 15-minute chart (which didn’t pan out
after a price break in today’s trade…my bad). In today’s trade however, a
reversal short caught my attention–but, this time it seemed to make sense to
emphasize the 5-minute chart, rather than one of the larger intraday time
frames. With the bearish pattern lined up on the smaller time frame, and the
stock demonstrating some relative weakness in today’s trade, it was all the
confirmation that I needed.
11:41:47
Intraday Setup Alert
Research In Motion (RIMM)
has pulled back from session lows into a bear flag as it trades slightly lower
on the session–down .11 at 67.51. Continuation shorts might be considered
below pattern and session lows of 67.35.
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Very nice action so far. I guess it goes to show
that sometimes it’s the smaller things, like a 5-minute chart, that can mean the
most to the intraday trader.
Chris Tyler