All Entries Tagged With: "Swing Trading"
Misdiagnosed Patterns Can Still Pay (HAR Trade Review)
September 16, 2012 at 3:47 pm
I don’t even know how many charts I’ve read over the years, but there are a couple of commas involved. I’ve been able to identify quite a few patterns and benefit from them, and of course I’ve been wrong a lot too.
What’s funny is that in this game, as long as you’re managing your risk well, you can sometimes be dead wrong on the pattern and still make money. Let me give you an example.
A few weeks ago, I noticed HAR as a stock which had cleared an important area ($42 in early August) and then had settled into a rest phase. I drew my trend lines and recognized a wedge, which was also a pennant after the advance in price. I set up a buy for $46 to get long on a return of strength.
Here’s a look at the chart of HAR when I set up the trade:
That buy triggered the next day, but the stock couldn’t get going. It actually churned for the next 6 sessions, including a test on day 5 of my stop, holding just a short distance above it to keep me in the trade. That dip was a test of support, but I was leery because I considered this to be a failure of the pattern and I expected to be taken out of the trade for a small loss.
Here’s the HAR chart at that point in the trade, and I began to realize the pattern was now a large channel and still intact:
This gave me a bit more confidence in the trade when the next day price lifted to create a little breathing room to my stop. It showed a bit more follow through, then held for a few days before hitting Target 1 on Thursday for a 5.2% profit.
Here’s a look at HAR after the return of strength:
This gave me an opportunity to lock in some gains and tighten my stop for remaining shares, which I did. Then on Friday, the stock rallied again, but hesitated $0.14 shy of Target 2, which was set at $49.60. Rather than hope for an extra few cents while risking more than $2 (my stop had been moved to $47), I booked the 7.4% winner and notified Bandits of my adjusted exit.
Here’s a look at HAR as it currently stands:
This stock may still hit Target 2, but with it being up now over 9% in the past 7 sessions, it’s due for a rest and it has approached a congestion zone from late spring.
When you’re setting up a trade, you evaluate the price action. But that evaluation doesn’t stop once you’re in. You have to keep asking questions of whether the risk/reward is worth staying in the position. This one had come to a point where stretching for a tiny bit more wasn’t worth the risk, so I took the solid profit with a smile. After all, my initial diagnosis of the setup was wrong, but I was still able to book a nice gain.
Trade Like a Bandit!
Jeff White
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A Few Lessons From AMGN (Trade Review)
September 14, 2012 at 2:38 pm
If you’re looking for excitement, this isn’t a post for you.
This is a recap of a trade which actually yielded nothing – but there were some good lessons tied to it. Plus, I certainly wouldn’t be bragging about a breakeven trade.
The Setup
Let’s go back to August 12th, the day I originally listed AMGN for a swing trade buy. The stock had outperformed the NAZ since June 11th with a 22% gain (vs. the NAZ up 7.5%). It clearly had momentum and had been able to put in some well-deserved rest for two weeks. I noticed the descending trend line from the high, and set up a buy upon a break of that trend line at $83.00 and shared it with subscribers.
Here’s a look at the chart of AMGN when I set up the trade:
That buy triggered on Aug. 14th, and over the next few weeks the stock grinded higher but never really gathered momentum. Three times it posted a new 52-week high, only to immediately hesitate afterward.
Adjustments
Having sat in AMGN for a few weeks with limited progress, I tightened my stop loss from $80 (initial stop) to $82 on Sept. 3 in order to reduce risk. The stock had just completed a multi-day pullback and it was appropriate to tighten up after strength returned. I tightened it again to $83 a week later after the stock had tagged the prior high to the penny, only to reverse lower. This looked ominous, so I tightened to my breakeven.
The AMGN chart with my stop adjustments along the way:
This gave the stock a little wiggle room to keep me in the trade should it turn back up, but it eliminated my effective risk in the trade. A stop out wouldn’t pay me a thing, but for a trade which never took off, neither would it cost me anything.
The Exit
I was taken out of the AMGN position at $83 on Wednesday, and since then the stock has broken down further with a solid breach of the multi-week uptrend line. Where it goes from here, I don’t know, but I sure don’t view this action as bullish so I’m out.
Here’s a look at AMGN as it currently stands:
On some trades, breakeven isn’t bad. You enter a great setup, you give it room, you stay patient, and it just doesn’t ever get going. This was one of those.
Hopefully by looking back at this trade, it’ll help you manage your next position better when it acts sluggish. If you’re seeing modest rewards but after ample time you’re really not getting paid, tighten up. Odds are, if it turns lower you’ll be glad you did.
Trade Like a Bandit!
Jeff White
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The Northern Road to Recovery
September 13, 2012 at 4:36 pm
One stock on my radar right now is Northern Oil and Gas – NOG.
Having emerged from a 48.5% correction from the January high to the July low, the stock has seemingly turned the corner technically. A quiet lift into mid-August was met with only limited selling pressure on weak volume. That carved out a higher low, then strength returned on heavier volume with the arrival of September to mark a higher high.
Currently the stock is sitting in a tight bull flag pattern, which if resolved to the upside, could spark a continued recovery in the name. This is one to put on the radar for the days to come, as this rest phase sets the stage for higher prices once again.
Here’s a closer look at the chart of NOG for you:
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Picking Up Points in Penney
September 7, 2012 at 9:15 am
Thursday allowed me to close out an excellent 11-day trade in JCP which paid 12.9%.
As simple as that sounds, there were several steps involved, including patience, so I wanted to walk you through the process of this trade from beginning to end in hopes of helping you with your next position.
Perking Up
With JCP having endured a significant downtrend from February to July, the stock sat more than 55% off its highs. That alone is never reason to enter a buy, but it can indicate the shorts are overconfident and the stock has become beaten-down enough to produce a bounce.
So, after seeing a short-term higher low established in early August, it was placed on my watch list. Not for a trade, but simply to monitor in case this developed into a change of character.
Here’s how JCP first looked when I noticed it and put it on watch:
Pressuring Resistance
Having then rallied past resistance, JCP then entered into a narrowing base just beneath a short-term level. Dips were getting bought a bit more aggressively, creating some higher lows over the previous few sessions.
I set up a buy for $24.80, which triggered on Aug. 23. Here’s a look at the chart I shared with subscribers when I listed the trade:
Producing Gains
The initial trigger wasn’t met with great enthusiasm, but neither did the stock fail its breakout attempt in grand fashion. It was quiet, so I stayed with it without panicking. Just a few sessions later, Target 1 had been reached for a pretty quick 8%.
The stock pushed just 8c past that level before seeing some mild profit-taking, which ultimately allowed me to tighten my stop for remaining shares. Here’s a closer look at the chart as of Target 1:
Pausing Before Payoff
The profit-taking was mild and took place on quiet volume, which meant virtually zero pain but also required a little patience. This stage of trades always brings on the questions… “is it done?”… “should I just book this and move on before it pulls back deeper?”.
But I stayed with my tightened stop and waited for the stock to either roll back over and stop me out or push higher and prove itself. That resulted in the final push, worth 12.9%.
Here’s a look at the rest phase before the pop to Target 2:
This was an excellent swing trade which paid off quite nicely. It took some good initial analysis to detect the play, it took proper management of the position once it was on, and it took a little patience to stick with it through the mid-trade lull before the final pay day.
These are the kinds of trades we make a big portion of our money on. Every one of them is shared with subscribers of our stock pick service, along with the entire trade plan from the outset and ongoing evaluation once the position has been put on.
Try us out for yourself and see if we don’t deliver the value I’m referring to. It’s no wonder so many of our members find the monthly price so easy to pay when plays like this are provided.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
YNDX Eyeing Continued Recovery
September 5, 2012 at 9:17 am
YNDX sold off hard and steady from its spring highs, shedding 40% from its peak to the June low. Not coincidentally, that low coincided with the December low from 2011, getting within 5 cents of prior support before stabilizing.
Since June, the stock has gradually worked its way higher, stabilized, and now looks ripe for some continuation. It’s sitting in an ascending triangle pattern, which could spark more buying if resistance gets cleared.
Note how volume is perking up in the last couple of sessions as price turns higher within the triangle. That may be an indication it’s gearing up for a move, so this one belongs on the radar.
Here’s a closer look at the chart of YNDX for you:
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
4 High-Level Breakout Candidates
September 4, 2012 at 10:37 am
With the indexes sitting not far from 52-week highs, a number of individual names are also pressuring longer-term resistance zones. I wanted to share a few breakout candidates I’m watching which belong on the radar in the days and weeks ahead.
AIG is acting well with a high Cup and Handle pattern, and is actually attempting a breakout today. A close above $35 is needed to confirm a breakout.
MKC has created a high-level base which almost resembles a saucer pattern. A push through $62 would constitute a solid breakout. This stock trades slightly lighter volume than the others.
RYL continues to exhibit strength, and has spent a few weeks challenging resistance. A breakout takes place through $27.25.
The $56 level has posed as multi-month resistance for CRI, and although the stock has pushed past it a few times intraday it has yet to close above it. That’s a well-defined level to keep an eye on which if cleared, would indicate an exit from this wide channel.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Shifting from Smart to Equipped
June 28, 2012 at 10:33 am
One of the things I love about TheStockBandit University is the opportunity to interact with the traders who enroll in the courses. As they’re learning and asking questions, I have the chance to see the light bulb go on when things begin to click for them. It’s very rewarding.
Recently a trader reached out to share his thoughts with me mid-way through the courses, and I just couldn’t help but share it with you here. This is what he wrote:
“I have just finished the “basic†course. I thought I would have a lot of questions, and I would be pestering you with emails along the way, but I have no questions. You answered them all and many besides. Perhaps, you gave me the skills and confidence to answer my own questions. Something happened anyway.
The “basic course†is very comprehensive. I’m excited now. I have gleaned lots of ideas from your presentation to improve my trading plan.
I’ve been to university, I have a degree in medicine. I can’t remember though, ever coming across such an excellent teacher. I suspect your teaching is spawning leaders in the field rather than followers.
On with the Advanced Course now. Can’t wait!
M.P.
That is so cool. This already smart trader is now equipped – and there’s a huge difference. That’s exciting to me, that the work I put into the courses is paying off for this trader. More importantly, his own efforts in the learning process are rewarding him with the ability to be self-directed in the markets. He’s no longer a slave to a single trading style. He no longer needs the market to do something specific in order to find success.
I rarely share testimonials here with you, but this was one I had to pass along for those of you who are on the fence when it comes to taking the next step toward becoming a self-directed, complete trader. Our stock trading courses are risk free – there is zero barrier to kicking the tires. Enroll today and find out for yourself what it’s like to be prepared for whatever the market throws at you.
Trade Like a Bandit!
Jeff White
Producer of The Bandit Broadcast
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