Thursday Evening

Maui... 'nuff said

Thursday Afternoon

NSM Daily Chart (11:50AM)

This is a relatively new issue that I've been watching and reading about in IBD.  If you're not afraid of the mortgage business this might be a nice stock to tuck in your portfolio.  Forward P/E is under 9 and it is optionable. 

Thursday Morning

Gator's Chart of the Day: SMG

Dan Fitzpatrick taught a course called "59 Minute Trader" and some of the bloggers (me included) took the class. I've seen other similar techniques discussed on other free and pay sites. Wednesday SMG was the perfect 59 Minute trade.  I use a combination of these ideas for my version of the 59er.

This trade sets up following an "event."  In this case it was a disappointing earnings outlook.  The 3 minute chart is shown above with the yellow line marking the previous close.  We need a minimum move of 8% but it works better with 10% or more.  In this case the drop was 16.7%.

The Trade

As trading begins you are watching for the opening print and the low.  Make note of both of these figures.  When the first green candle prints hit the buy button.  You would be in here under 36. Since this is a bounce trade it is expected that the low of the day has already been made and the stop should be just below that.

This trade will likely move very quickly so be ready to add.  If the stock has not yet cleared the opening print (this one did) then wait for it to clear that level and then add aggressively.  If it continues to move higher then fill out your position if you have not already done that with the first two buys.  As each successive buy is made place a stop just under that buy point and watch.

When volume begins to slow be ready to take some profits (I like to sell 1/3) but let the rest run.  Unless you want to hold the stock longer than today I think it's best to move your lowest stop up to insure you will have profits. 

As the name of the technique suggests this trade is likely over in the first hour as the sellers have dumped and the bounce buyers have gotten their fill.  I have used this method many times and it's one of my favorites.  The risk is very low if you put that stop in as soon as you make the first buy and then respect it.