Wednesday, February 22, 2012

Evening Thread

Blog got heated today. This seems apropo.
I got nuttin' to say so y'all have at it.  Get it out of your systems tonight and let's get back to business tomorrow.

Afternoon Thread


Spring training started.  Toes is offering advice.
Market sure seems heavy today.  Silver, Gold, Drug Related Products and Movie Theaters are the leading Morningstar groups.  Financials and Home Builders are trailing the pack.  Good luck.

Morning Thread

Gator's Chart of the Day: TSRA
TSRA 5 Minute Chart
Tessera stock holders puked up their holdings on 4 times average volume yesterday.  With a beta approaching 2 that made for a big move down.

Looking at the 5 minute chart you can see bottom fishers came for the stock in the last 30 minutes of trading.  This is the kind of event that generates 59 Minute trade opportunities.

THE TRADE

1. Watch for the first green candle on a 3 or 5 minute chart. (Aggressive traders can use 1 minute.)
2. As soon as the green candle prints buy the stock (or option if that's your thing.)
3. Immediately put your stop (hard or mental) just under the low of the day.
4. If the stock continues to move up on increasing volume you can add aggressively.
5. If your position is becoming profitable don't let them get away.  Move your stop up.
6. As volume decreases watch for evidence that the run is done.  (A couple of sequential red candles on a 3 minute chart is usually enough for me but your tolerance may differ.)

This can turn into a longer term hold but that is not generally the case for this kind of trade.  The idea was to make money on an overreaction to the event that caused the big drop.  HONOR YOUR STOP!!!