Trading Review for 3/14

Trading Review for 3/14/2000

There was a blood bath in the biotech sector today after President Clinton and UK Prime Minister Tony Blair both publically announced that they were intent on making all gene related data from the Human Genome Project publically available. Saying "To realize the full promise of this research, raw fundamental data on the human genome, including the human DNA sequence and its variations, should be made freely available to scientists everywhere."

This caused panic selling in biotechs (specifically the genomics subsector) were many of these companies have had plans to patent their fundamental data on human gene research. While this writer believes such patents regarding the basic structure of anything that is naturally occuring should be invalid on their face (it would be like the first person to discover the composition of air trying to patent it and charging the rest of us for breathing or Lewis and Clark having mapped a path across the country suddenly claiming a toll from everyone moving west) - there is still incredible profit potential for many of these companies and today's panic selling will likely eventually offer good long entries into many of these stocks.

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 today's trading action relative to the top Trade Prospector signals:

Volatility - Volatility Compressions, Trading Range Patterns, and Multiday Patterns

INCY Gapped open and rallied back into its trading channel above 209.4 early and when buying pressure failed, it triggered shorts as it again fell through the bottom of its channel for up to an amazing 74 points

HYSQ Triggered short trades when it fell through its 57.2 lower breakpoint for up to 16 points

MERQ Gapped open to just below its upper trading channel boundary but then lost its momentum and began selling off - it triggered shorts at its 113.2 lower channel boundary for up to about 7 points

PDLI Gapped open and rallied back into its trading channel, setting up a terrific channel breach short opportunity when it fell back through the 263.6 lower channel boundary for up to 93 points

SFE Gapped open and rallied through its 260.7 upper breakpoint twice for up to 4 points each

GLW Rallied from the open only to bounce off strong resistance at its 187.7 upper breakpoint and sell off for the rest of the day - when it fell through its 181.1 lower breakpoint it triggered short trades for up to 4 points (a reversal trade off the upper breakpoint resistance added 6 more points)

ADI Crashed through its 163.5 lower breakpoint for up to 18 points

A Rallied at the open only to watch the rally fail short of its 137.9 upper breakpoint, when the selloff went through the 128.5 lower breakpoint, short trades were triggered for up to about 10 points

Momentum - Breakthrough Momentum and Momentum Intersections

SNE Gapped open on a momentum reversal beyond its failure boundary - no trade

BBH Continued its downward momentum through its 190.7 continuation boundary for up to 24 points

VICL Congested around 40 for much of the morning until it picked up its downward momentum again through its 36.6 continuation boundary for up to 8 points

NTRO Gapped higher and ran up short of its 99.9 failure boundary only to have its downward momentum resume - it triggered shorts at its 90 continuation boundary for up to 4 points

TFSM Bounced around near its 60.4 upward momentum continuation boundary but was unable to penetrate it decisively - traders were stopped out for one point

BEOS Traded within its momentum boundaries - no trade

MLTX Traded within its momentum boundaries - no trade

Trading Channel - Channel Breach, Near Trading Channel, and Near/Narrow Channel

PDLI Gapped open and rallied back into its trading channel, setting up a terrific channel breach short opportunity when it fell back through the 263.6 lower channel boundary for up to 93 points

ETEK Gapped back into its trading channel and triggered shorts at its 278.1 lower channel boundary for up to 26 points

IMCL Gapped lower and triggered shorts at its 116.1 lower breakpoint boundary for up to 15 points

INKT Gapped beyond its upper breakpoint - no trade

SCMR Triggered shorts when it crashed through its 146.8 lower breakpoint for up to 8 points

SNDK Blasted out of its trading channel by gapping open 19 points, it pulled back below its 137.5 upper breakpoint and gave long trade entries when it again rallied and traded through that boundary for up to 9 points

GSPN Gapped open 7 points higher and triggered brief long trades at its 131.7 upper breakpoint for up to 2 points - it then congested around the upper breakpoint until about noon and finally did a classic reversal back through the upper breakpoint - it triggered shorts at the 121.2 lower breakpoint for up to 9 points (those taking the reversal from BP1 picked up an extra 10 points)

MYGN Gapped higher but quickly sold off through its 159.9 lower channel boundary for up to 18 points

CMRC Gapped open above its trading channel but buying soon faded and fell back below its 250.7 upper channel boundary - a quick trade for up to 3 points presented itself in the morning when the stock momentarily rebounded back through its upper channel boundary, but selling continued and dragged the stock down through its 240.5 lower breakpoint triggering shorts for up to 16 points

Envelope - Breakout Patterns and Envelope Patterns

MUEI Bounced off its upward continuation boundary and reversed course finally falling through its 17.5 failure boundary for up to 1 point (the reversal added 2 more points)

SDS Gapped open well beyond its upward momentum continuation boundary - no trade

MXTR Opened at its 13 continuation boundary but its momentum failed and it congested around 13 for most of the morning before selling off - traders were stopped out for breakeven or fractional losses

NETM Failed to penetrate its 9.7 continuation boundary and its envelope pattern lost steam and it reversed, selling off for the rest of the day - no trade unless you played the reversal for up to 1 point

CCR Signalled a long entry at the close when it finally penetrated its 26.6 entry boundary - daytraders would not have entered so close to the market close, but multiday traders are now holding a long position - set your trailing stops based on TP info for Wednesday

LUV Failed to penetrate its 19.4 long entry boundary - no trade

AMGN Gapped open above its false breakdown boundary @ 58.8, but quickly sold off - when it sold through its 57.4, traders entered short for up to 6 points (multiday traders are still holding the short with a trailing buy stop).

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).

INCY	Gapped open and rallied back into its trading channel above 209.4 early and when buying pressure failed, it triggered shorts as it again fell through the bottom of its channel for up to an amazing 74 points
HYSQ	Triggered short trades when it fell through its 57.2 lower breakpoint for up to 16 points
MERQ	Gapped open to just below its upper trading channel boundary but then lost its momentum and began selling off - it triggered shorts at its 113.2 lower channel boundary for up to about 7 points
PDLI	Gapped open and rallied back into its trading channel, setting up a terrific channel breach short opportunity when it fell back through the 263.6 lower channel boundary for up to 93 points
SFE	Gapped open and rallied through its 260.7 upper breakpoint twice for up to 4 points each
GLW	Rallied from the open only to bounce off strong resistance at its 187.7 upper breakpoint and sell off for the rest of the day - when it fell through its 181.1 lower breakpoint it triggered short trades for up to 4 points (a reversal trade off the upper breakpoint resistance added 6 more points)
ADI	Crashed through its 163.5 lower breakpoint for up to 18 points
A	Rallied at the open only to watch the rally fail short of its 137.9 upper breakpoint, when the selloff went through the 128.5 lower breakpoint, short trades were triggered for up to about 10 points

SNE	Gapped open on a momentum reversal beyond its failure boundary - no trade
BBH	Continued its downward momentum through its 190.7 continuation boundary for up to 24 points
VICL	Congested around 40 for much of the morning until it picked up its downward momentum again through its 36.6 continuation boundary for up to 8 points
NTRO	Gapped higher and ran up short of its 99.9 failure boundary only to have its downward momentum resume - it triggered shorts at its 90 continuation boundary for up to 4 points
TFSM	Bounced around near its 60.4 upward momentum continuation boundary but was unable to penetrate it decisively - traders were stopped out for one point
BEOS	Traded within its momentum boundaries - no trade
MLTX	Traded within its momentum boundaries - no trade

PDLI	Gapped open and rallied back into its trading channel, setting up a terrific channel breach short opportunity when it fell back through the 263.6 lower channel boundary for up to 93 points
ETEK	Gapped back into its trading channel and triggered shorts at its 278.1 lower channel boundary for up to 26 points
IMCL	Gapped lower and triggered shorts at its 116.1 lower breakpoint boundary for up to 15 points
INKT	Gapped beyond its upper breakpoint - no trade
SCMR	Triggered shorts when it crashed through its 146.8 lower breakpoint for up to 8 points
SNDK	Blasted out of its trading channel by gapping open 19 points, it pulled back below its 137.5 upper breakpoint and gave long trade entries when it again rallied and traded through that boundary for up to 9 points
GSPN	Gapped open 7 points higher and triggered brief long trades at its 131.7 upper breakpoint for up to 2 points - it then congested around the upper breakpoint until about noon and finally did a classic reversal back through the upper breakpoint - it triggered shorts at the 121.2 lower breakpoint for up to 9 points (those taking the reversal from BP1 picked up an extra 10 points)
MYGN	Gapped higher but quickly sold off through its 159.9 lower channel boundary for up to 18 points
CMRC	Gapped open above its trading channel but buying soon faded and fell back below its 250.7 upper channel boundary - a quick trade for up to 3 points presented itself in the morning when the stock momentarily rebounded back through its upper channel boundary, but selling continued and dragged the stock down through its 240.5 lower breakpoint triggering shorts for up to 16 points

MUEI	Bounced off its upward continuation boundary and reversed course finally falling through its 17.5 failure boundary for up to 1 point (the reversal added 2 more points)
SDS	Gapped open well beyond its upward momentum continuation boundary - no trade
MXTR	Opened at its 13 continuation boundary but its momentum failed and it congested around 13 for most of the morning before selling off - traders were stopped out for breakeven or fractional losses
NETM	Failed to penetrate its 9.7 continuation boundary and its envelope pattern lost steam and it reversed, selling off for the rest of the day - no trade unless you played the reversal for up to 1 point
CCR	Signalled a long entry at the close when it finally penetrated its 26.6 entry boundary - daytraders would not have entered so close to the market close, but multiday traders are now holding a long position - set your trailing stops based on TP info for Wednesday
LUV	Failed to penetrate its 19.4 long entry boundary - no trade
AMGN	Gapped open above its false breakdown boundary @ 58.8, but quickly sold off - when it sold through its 57.4, traders entered short for up to 6 points (multiday traders are still holding the short with a trailing buy stop).