Qualities That I Look For In ‘Pullbacks’
If your trading produces a steady stream
of profitable edge, that’s all that matters. In the TM chat earlier today, I
was asked about a ‘pullback’ in Lexar Media
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LEXR |
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PowerRating). The stock has been a
great performer on the daily timeframe, but when drilling it down to the
intraday ‘look’, I didn’t see any compelling evidence. I was looking at the 5-Minute
chart at 12:45 when I gave my opinion. Now, had I been using the 1-Minute
chart, and possibly some technical tools that I don’t personally look at, my
view might very well have been persuaded. Take a gander yourself, and without
any hindsight bias, try determining if this was a trade that presented a
tradable edge for you. It so happens that the member who pointed this one out
has been a great contributor within our little room, and someone that is
definitely associated with discipline and trading longevity, something we all
strive for.
What I ended up doing, was pointing out a
potential trade that looked to be setting up in an intraday ‘pullback’, to our
members in the chat. Remember, there are no right or wrongs here, only that
which works for us consistently. In this particular instance, my choice, as well
as LEXR, ended up not being successful pullback trades, but that doesn’t mean
the trade with edge didn’t exist.
For my ‘pullback’ candidate I used Manugistics
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MANU |
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PowerRating). First of all I will say that I came across MANU by accident. It
happened to cross the tape on Briefing, so with the headline in plain sight, I
took a look. Manugistics also happened to look like the type of pullback
candidate that I would normally alert our members to. With the stock breaking
out on the daily chart in today’s trade on heavy volume, and now retesting
(slightly above) prior highs near the extended intraday 38% retracement mark, it
had the earmarks of what I consider to be ‘a trade with edge.’ MANU was also
forming a five-bar consolidation on the 5-Minute chart (which I use for intraday
alerts), providing us with a nice pattern from which to work.
As it turned out, Manugistics never actually
triggered out of the pattern, and above resistance, but for some people, the trade
within this narrow consolidation might have presented itself. Again, no fault
there, as long as we’re consistent in trading the long-term edge that has been
so kind to us in the past, and more likely than not, will continue to do so well
into the future.