Here’s my plan for trading KLAC today
Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
Dave Floyd’s Daily Forex Alerts
In
yesterday’s article
I had made the case that our target price for the S&P’s was still at 1181.
I also has suggested a few stocks that would likely track the market lower if
the S&P’s did move towards 1181.This did in fact play out, I trust some
of you had made some notes and taken the trades…
Per yesterday’s article I suggested that you short
Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating) on a break of
$76 with $74 being a real possibility as a price target.
While AMGN did not achieve the ideal target price of $74, we recommended that
our clients take profits on a portion of the trade at $75 and trail a stop loss
on the remainder.
Stocks like
(
LEH |
Quote |
Chart |
News |
PowerRating) and
(
BRCM |
Quote |
Chart |
News |
PowerRating) never quite set-up as we had outlined
for continuation shorts. LEH did track the market lower however, but it
never traded up into our entry ‘zone’ of $111.10-30 where we were inclined to go
short.
There was one trade worth noting that took place today that underscores the
effectiveness of Rubber Band trades .Look at this set-up to the short side
in
(
IVGN |
Quote |
Chart |
News |
PowerRating).
Referring back to the S&P forecast on the S&P’s from yesterday, we suggested
that 1181 would be the target level. Essentially when a target level is
achieved, it does not mean that there will be an immediate reversal, although
that is likely. What one would expect however, is for a
pause/consolidation. Price action after that will really depend on the
technical situation thereafter.
The S&P’s did in fact pause at 1181, but eventually made another thrust lower.
Shortly before the S&P’s broke below the 1181 level, which we had begun to
sense was going to happen as the stochastics began to rollover, we noticed by
way of a our filter, that IVGN was on a tear to the upside.
While this may be counter-intuitive, when the market is about to break to new
lows, very few stocks will remain terribly firm, if they do, you will know real
quick when they do not go down despite a general market sell-off. However,
I viewed it as more vulnerable to selling pressure versus a stock that had not
experienced such a sharp spike higher.
The risk on a trade like this is simply the day high, in this case $72.
Given our entry at $71.90 (right as stochastics crossed) we were risking only 10
cents, a very reasonable trade. The ‘grey’ shaded area noted in the above
chart shows the type of price action that lays the foundation for a Rubber Band
Short. The fact that it occurred just before the S&P’s broke to day lows
was simply ideal timing.
Stochastics led us into the trade, and tape reading and stochastics led us
out of the trade as well, I exited at $71.47.Granted this trade was well
timed in terms of IVGN rallying just ahead of a S&P sell-off, but that is why in
this day and age you need software in order to highlight these set-ups in
real-time.
Looking Ahead To Tomorrow
I am not as clear on the technical outlook for tomorrow given that today was
a big day in terms of our targets being hit and also due to the fact that the
S&P’s are now in a mildly oversold level. As a result, any moves from
here, higher or lower, will likely be somewhat muted until this move is
digested. Naturally the trend is still down, so we will lean towards
prices heading lower, but unlike yesterday, there is no clear patterns emerging.
We do have our eyes on
(
KLAC |
Quote |
Chart |
News |
PowerRating) as it is poised to make some moves lower.
As always, feel free to send me your comments and questions.
Dave Floyd is a professional FX and stock trader based in
Bend, OR and the President of Aspen Trading Group. Dave’s approach to FX
combines technical and fundamental analysis that results in trades that fall
into the swing trading time frame of several hours to several days.