A Simple Daytrading Trick For Intermediate-Term Traders
Sometimes
I’m amazed at just how fast things can change.
In my
report on Wednesday, I discussed many of my market observations. Within
a day or two of publishing that, some amendments certainly need to be made.
First and foremost, in doing
my research over the weekend, the number of stocks that seemed to be setting
up in basing patterns was stronger than it had been in a long time. The
few weeks prior to this I had seen significant weakening in the number of stocks
completing bases, and I noted this in Wednesday’s report. I was pleasantly
surprised to see the dramatic increase, and feel it is definitely noteworthy.
I also
mentioned that breakouts had struggled lately. Not today. Intermediate-term
traders should take note that there were several good-looking breakouts today.
What will be key is to see if they will continue to follow through. Here
are a few example
Nam
Tai Electronics
(
NTE |
Quote |
Chart |
News |
PowerRating) surged out of its most recent flat base on
a nice surge in volume.
Sportsman’s
Guide
(
SGDE |
Quote |
Chart |
News |
PowerRating) had a similar-looking breakout out of a flat base.
Petrochina
(
PTR |
Quote |
Chart |
News |
PowerRating) broke out of a fairly tight consolidation on a big gap up.
The entry
for PTR may have been a little trickier for intermediate-term traders. Stocks
that gap up and continue higher many times make for the best breakouts. They
also carry more risk, since you’re not buying near the pivot point, and most
of the time, gaps fill. In a case like this, I prefer to use day-trading techniques
to time my entry.
A simple
daytrading trick that could have been used with PTR is to wait for the first
consolidation, and buy the breakout of that. Much of the time I will require
the stock to trade until about 10:00am before considering taking a breakout.
A look at an early morning 1-minute chart shows that the high of the 1st
half hour was $39.00. The low was at $38.60, and a stop could have been placed
a little below that.
Whenever
a short-term pattern is used for entry, I believe partial profits should be
taken in that time frame as well. In this case, your reward would have equaled
initial risk around $39.50. It would have been reasonable to take some profits
near there and trail your stop higher on at least a portion of the remaining.
Feel free
to contact me if you have any questions.
Good trading,
Rob Hanna