Trading Review for 3/21/2000
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
LSI Remained within its boundaries, but finished up near its upper TC and BP boundaries (82) - look for a breakout soon RHAT Traded through its 57.8 lower breakpoint twice - first for up to 1 1/2 points and then again for up to 1 point LBRT Traded through its 67.5 lower breakpoint for up to 2 1/2 points - a very strong finish may be signalling a reversal in its recent downward trend AXP Sold through its 140.6 lower breakpoint from the open for up to 2 points and then found a bottom and rallied back through the lower breakpoint and ultimately back through the upper breakpoint at 146.4 for up to 2 point points RIMM Gapped open below its 126.4 lower breakpoint and continued selling through its 122.5 lower channel boundary for up to 6 points CBS Traded through its 60.8 upper breakpoint giving longs up to 1 point and continuing its recent upward trend ITWO Fell through its 164.8 lower breakpoint for up to 15 points
Momentum - Breakthrough Momentum and Momentum Intersections
PDLI Gapped lower continuing its downward momentum, but gapped beyond its 124.9 continuation boundary - no trade MSTR Continued its downward momentum through its 80.5 continuation boundary for up to 17 points CHKP Reversed just short of its 189.4 downward continuation boundary and ultimately traded through its 222.9 momentum failure boundary for up to 4 points - traders who took the clear reversal at the continuation boundary picked up an extra 33 points VERT Triggered shorts at its 173.4 continuation boundary for up to 3 points AKAM Gapped below its 212.8 continuation boundary - no trade AVTC Remained within its boundaries - no trade IS Gave a fractional short at its 17.5 continuation boundary
Trading Channel - Channel Breach, Near Trading Channel, and Near/Narrow Channel
RMBS Gapped below its lower breakpoint and climbed to just below the lower breakpoint before selling off again - the only trade was for aggressive traders who risked the failed rally at the lower breakpoint and were rewarded with 30 points AMCC Sold through its 228 lower breakpoint for up to 7 points, the afternoon rally back to just below its upper breakpoint may indicate a continued rally RBAK Triggered shorts at its 318.2 lower breakpoint for up to about 7 points then rallied back into its trading channel above 331.8 and triggered short trades when it once again fell down through its lower channel boundary for up to 15 points AFFX Triggered shorts at its 180.4 lower breakpoint twice - first for up to 17 points and again for up to 31 points CHKP Reversed short of its 189.4 lower breakpoint and rallied - reveral traders garnered up to 36 points, directional swing traders gained 11 EBAY Triggered one point shorts at its 191.3 lower breakpoint, the stock then rallied back through its 206.8 upper channel boundary for up to 9 points - directional swing traders entered long at 203.9 and gained up to 12 points HBCCA Triggered long trades at its 108.8 upper channel boundary for up to 3 points - no directional swing trades, the price remained above the swing point PPRO Sold through its 123.5 lower breakpoint for up to 15 points SWCM Sold through its 136.9 lower breakpoint for up to 13 points - no directional swing trades, the price remained below the swing point
Envelope - Breakout Patterns and Envelope Patterns
ZIXI Remained within its boundaries - no trade TECD Remained within its boundaries - no trade GNTX Was range bound within its boundaries - no trade SPNS Reversed exactly off its 11.8 continuation boundary for and traded through its 13.5 failure boundary - the reversal was worth up to 2 1/2 and the long at the failure boundary was worth 1 point KOOP Continued its downward trend through its 6.6 continuation boundary for a fractional gain OMKT Triggered shorts at its 34 entry boundary for up to 3 points TRRA Gapped below its 91.9 short entry boundary - no trade CUBE Gapped below its 77.9 short entry boundary - no trade (it found strong support at 73 1/2 and rallied into the close, this may indicate a false breakdown - watch for possible long entry) COVD Troggered shorts at the open at its 82.4 short entry boundary for up to 6 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).