Patience Pays
Duke Heberlein is on
vacation this week. Michael Brooks wrote this article.
A simple, yet potentially powerful,
intraday pattern is the forming of
a consolidation or Slim Jim near the highs or lows of the day. These patterns
can offer explosive moves as they break from the range. Many such patterns come
across the TradersWire throughout the day. Take a look at the example below:
10:29:43
Countrywide Credit Loans (CCR)
is consolidating at its intraday highs. The stock may be in the process of
tracing out a handle on its weekly chart, and has bounced off its 50-day moving
average. CCR is up 0.82 at 48.37.
This pattern has several factors pointing to a break higher.Â
- The
weekly chart appears to be making a possible handle which gives us a bigger-picture long signal. - CCR showed strength in the morning as it
moved up on strong volume. - The stock established a fairly tight range near the
highs on lighter volume.Â
Multiple signals pointing towards a long trade.
So, what happened? The stock didn’t do what it was supposed to do. If you
trade for any length of time, you will experience this scenario more than once.
One way to avoid some of these situations is to wait for confirmation with a
break above the base. Many traders become impatient and jump the trade in fear
they will miss the train. Well, sometimes the train will leave without you. Fortunately,
Mr. Market keeps to a pretty regular schedule and another opportunity ride is
usually not to far around the corner.
Remember this the next time you want to sneak on board a little early and you
will find that a little patience will keep more money in your account, instead of
your broker’s.
Have a great trading day!!