Trading Review for 2/16/2000
In spite of a generally down day for the markets, there were many profitable bright spots if you knew where to look for them and when to enter the trades.
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 Monday's trading action relative to the top Trade Prospector signals:
Volatility - Volatility Compressions, Trading Range Patterns, and Multiday Patterns
VERT Broke through the 206.3 upper boundary for a long entry worth 5 points MSTR Popped through the 176 upper boundary several times for a total of 5-6 points ETEK Gave a good long entry at the 200.9 upper boundary for almost 17 points SIFY Quickly ran through its 75.2 upper boundary for 11 points MLNM Blew through its 223 upper boundary for an amazing 43 point gain GLW Bounced within its boundaries - no trade RIMM Fell through its 109.4 lower boundary triggering shorts for 3 points ALKS Burst through the 124.9 upper boundary for 22+ points QLTI Triggered shorts at the 68.3 lower boundary for 1 1/2 points
Momentum - Breakthrough Momentum and Momentum Intersections
ENZN Reversed a confirmed failed downward momentum by falling through the 41.2 boundary for 4 points BOW Fell through the 53.3 boundary for 3 points MMGR Remained within its boundaries - no trade CMNT The upward momentum momentarily failed and it triggered shorts at the 23.6 failure boundary for 2 points before reversing and reasserting its upward momentum ASPX Trapped within its boundaries - no trade
Trading Channel - Channel Breach, Near Trading Channel, and Near/Narrow Channel
AMCC Took time off from yesterday's incredible run but remained above its trading channel and within its breakpoint boundariess VRSN Triggered longs at the 223 upper breakpoint for 7 points PMCS Gapped beyond its 159.4 upper breakpoint but eventually gave a good long entry for 13 points TERN Remained within its trading channel and breakpoint boundaries - no trade DCLK Crashed through its 107.2 lower breakpoint for 8 points CMRC Gapped beyond its 167.7 upper trading channel but continued through its 171.1 upper breakpoint boundary triggering longs for 17 points STM Gapped below both its trading channel and lower breakpoint boundary - a big short, but no trade NXTL Initially rallied and bounced off its 125.3 upper trading channel and fell through its 119.8 lower channel boundary - the reversal was worth 6 1/2 points, the breakout was worth 1 point
Envelope - Breakout Patterns and Envelope Patterns
HYSQ Triggered longs at the 91.4 upper envelope boundary for 10 points MMGR Briefly poked above the 100.6 upper boundary for 2 points and then reversed for 7 points LHSP Remained within its envelope boundaries - no trade EPG Also remained within its envelope boundaries - no trade PCMS Another boundary trapped stock - no trade
Of interest to trend traders - from the 20% pullback group, GENE (3 points) - from the pullbacks to support group, PEB (4 points on a reversal), YNR (1 1/2 points)
Of note to daytraders using the trading index feature - Under $50 - ENZN (4 points), GENE (3 points), Under $100 - SIFY (11 points), LWIN (3 points on reversal), HYSQ (10 points), All - AETH (10 points), CRA (23 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).