Trading Review for 2/9/2000

As we noted yesterday, the market was due for at least profit taking if not a short term top (especially with the VIX, SPY, QQQ, etc. registering volatility based indicators).  But even on a down day for the indices when shorts were reaping the big bucks, there were also still money making long trades if you had the information on where to look and when to trigger them.

Successful trading is about knowing where to look for opportunities, knowing when to seize the opportunity (or not), and managing their risk to maximize their profits.  To that end, let's take a quick look at Wednesday's trading action relative to the top Trade Prospector signals:

Volatility Compressions

SNDK remained within its volatility boundaries

CMRC triggered shorts at the 162.8 boundary for 8 points

QCOM exactly bounced off its 140 upper boundary twice giving reversal traders two shorting opportunities - one for 4 points and the other for 7 points

Trading Range Patterns

JNPR gave two long entry triggers at the 173.4 upper boundary - one for 15 points and another for 30 points

MLNM triggered traders first long at the 227.7 upper boundary stopping and ultimately stopping them out but providing a good reversal entry for 10 points - a subsequent reversal off the lower boundary was good for 6 points

JDSU reversed off the 212.1 upper boundary for 10 points - penetration of the 205.9 lower boundary gave breakout players 3 points

 

Mutliday Patterns

JNPR gave two long entry triggers at the 173.4 upper boundary - one for 15 points and another for 30 points

MLNM triggered traders first long at the 227.7 upper boundary stopping and ultimately stopping them out but providing a good reversal entry for 10 points - a subsequent reversal off the lower boundary was good for 6 points

JDSU reversed off the 212.1 upper boundary for 10 points - penetration of the 205.9 lower boundary gave breakout players 3 points

 

Breakthrough Momentum

VNWK triggered longs near the 55.2 upper boundary for 7 points

VTSS gapped open but gave traders following the 1/2 point gap rule a long entry for 6 points

GMST popped through the 70.4 upper boundary for 2 points

Momentum Intersections

VYTL reversed just short of the 61 upper boundary for 4 points

DE gapped open but still gave traders long entry at the 39.6 upper boundary for 1 1/2 points

TOT gapped open and gave no good trade entry

Near Trading Channel

INCY gapped above its trading channel and remained above it all day - but astute traders who then used the 144 upper breakpoint (BP1) as the alternate breakout boundary picked up 16 points

VRIO gaped above its trading range (but did not hit its BP1) and then sold off - no trade

GS remained in its trading range - no trade

 

Near and Narrow Trading Channel

None

 

Breakout Patterns

NT gapped open beyond its breakout boundary, peaked at 124 and then sold off back through the upper boundary - it later gave a good long entry at the 122.5 upper boundary for 2 points - reversal players who played the initial fall back through the upper boundary picked up an extra 2 points

QQQ bounced off th 204.2 upper boundary twice and gave reversal players 7 points

VIA.B sold off from the open and only triggered a momentary fractional short trade at the 60.9 lower boundary

CHV reversed off the 78.4 upper boundary and continued selling off through the 77.7 lower boundary down to 74 15/16 - breakout players picked up 2 1/2 points and reversal players picked up about 3 1/4

Envelope Patterns

ALKS gave a brief 1 point long trade at the 111.5 upper boundary and a subsequent 8 point reversal trade

CHIR fell through the 48.1 lower boundary for 3 points

SOFN after gapping open and then selling off, it triggered longs at the 45 boundary for 5 points

 

Of interest to trend traders - from the 20% pullbacks group, VERT (5 points), CKFR(3 1/2 points) - from the overbought group, RIMM (2 points), FIBR(2 points), HGSI (12 points on reversal)

Of note to daytraders using the trading index feature - the top performers in each index category offered traders the following profit opportunities today (these are breakout and reversal based points, daytrading with more granular S/Rs could produce better results):

Under $50 - CORR (2 points), ANCR (1 1/2 points), VTSS (6 points)

Under $100 - FIBR (1 point), LHSP (1/2 point)

All - AFFX (2 points), CRA (10 points on reversal), NSOL (12 points)

Knowing where to expect, and capitalizing on, reversals is a key profit making tool in the daytrader's arsenal.

Whipsaws can happen in choppy markets and traders should always step away from the trade or give themselves more distance from the original entry boundary when a reversal occurs (such as adding one point to the reversal side of the trade entry boundary) to reduce the effect.  Losses are a fact of life, but they can be easily kept to a minimum while maximizing your profits with proper stop management.

Recognizing that a mere one point per day profit when trading 500 shares (or 5 option contracts) is $120,000 per year, you  begin to understand the potential for profit in applying Trade Prospector's information.

Copyright 2000, by Third Millennium Trading.  All rights reserved.  This information is proprietary and reserved for the personal use of Trade Prospector users and registrants.  No other use is permitted without the express authorization of Third Millennium Trading.

Disclaimer: Third Millennium Trading does not recommend the purchase or short sale of any stocks.  Trading should be based on your own understanding of market conditions, price patterns and risk.  The information presented here is designed to contribute to your understanding. Controlling risk through the use of protective stops is critical (more).