Playing Momentum, Lowering Risk
When momentum strikes, all you can do is play it. There is no telling where
it will end. That being said, when a stock gets extended in either direction,
taking on a position can be scary, since the rebound can be vicious. How do you
solve this problem? Finding a low-risk pattern that employs a tight stop, such
as the Slim Jim.
10:57:13
Intraday Setup Alert
Sears Roebuck Co.
(
S |
Quote |
Chart |
News |
PowerRating) has been forming a
Slim Jim at its intraday lows. The stock is a member of TM’s Implosion
List and is down 8.20 at 25.75.
The stock breaks down for almost a 2-point profit out of the
pattern. With this pattern, you protect yourself by having your initial
protective stop placed just above the high of the pattern, risking only a small
loss in the event the stock does bounce back to the upside. The small initial
risk, along with the market rolling over somewhat after the first hour, helps you
get in the trade with no anxiety.
It is important to find the smallest risk possible when getting
into a position, regardless of your time frame. When the situation warrants,
look for setups that pose the lowest risk.
Until tomorrow,