Day Trades - TCK, CLF, TBL

Bear flags have been hit and miss in this market. Mostly they've been fake outs. So why was TCK a good short? From the daily chart above, we noted a huge volume spike on the Feb. 9th drubbing. So we see a huge red stick with volume, plus bear flag with NRIB observing the downsloping 5 ema as resistance closing at the base of support. This bear flag felt like it could work.

Small size on break of $58.00 and added at the first consolidation BO. Took a partial after 3 consecutive WRBs on 15 min. timeframe (not depicted). Got stopped on balance as price capitulated into $56.00 and bounced.

CLF gapped up on earnings. Price chopped around in the first hour and then started basing in an increasingly narrow range, forming a flat base at $99.50, and setting up a gap fade.

Price breaks down, retests the base and runs lower for 3 consecutive 15 minute bars. Take a partial as price approaches $98.00. CLF snapped back sharply. I thought the second half was going to get stopped out at BE, but, it came back down and I was able to salvage a decent profit on the second half.

Looking back at the 15 minute chart, there just wasn't enough volume expansion on the initial leg lower to expect continuation.

TBL was another earnings gap from the Trade-Ideas scanner - gap up min. $1.00, RSI on 15 minute timeframe minimum 60.

TBL gapped and ripped then spent most of the rest of the session in a tight narrow range. Normally, I like to buy the BO of the upper range, but time was of the essence, so I decided to buy the bounce off of the bottom of the range, then if the BO failed, I would have some profit from the trade. Turned out to be a good strategy as price/volume expanded into the close. The base BO also set up perfectly with a low risk NRB on the 15 min. timeframe.

Entry and exits depicted on 1 minute chart below.

Can't Keep a Good Scan Down

I get an extra boost of confidence when a stock that I have recently read about (from technical trading blogs that I follow) hits my RT scanners. Often these stocks are already on my watchlist. Such was the case today with RIMM (Jamie's post here last night) and AU (HCPG blog a couple of days ago). The fact that the stock is being noticed/discussed elsewhere implies move potential in either direction - I simply go with the NOW moment flow.

Also from the scanner, UNP had a very nice gap up and consolidation setup. The snapshot below captures some key scanner hits today and 15min charts for RIMM & UNP with the associated NR7 bars highlighted. I just love it when a scan, I mean plan, comes together.

Tracking Big Gappers - RIMM

Trader Jamie advocates populating his WL with stocks that have recently experienced a large, high volume gap. Besides being a WL regular, RIMM experienced a big upside gap last Friday after beating estimates. The daily chart is shown below.


On Friday, RIMM was in consolidation mode. Today, the opening range (30min) action demonstrated that RIMM was in a range expansion mode (wide range, full bodied, green candles). Following a breakout of the OR, the 15min chart setup a low risk entry following a doji candle at the ORH. The target was a 62% extension of the OR.

Question on WL and Stock Selection

Anarco ask the following question(s) in the comments and I feel it is a very common question: I typically start my morning with my WL and a few other stocks (gapers, earning stocks, etc) and as I go through the charts, I keep narrowing down the ones I want to focus on. But many times I find myself not making the most optimal selection and, of course, I realize that after I am already in the trade. So my question is: do you feel that making “good picks” is simply a matter of gaining more experience? Or do you feel there are other factors to consider? For example, do you find that the action in the daily chart (previous day/s action) is a deciding factor?

Anarco, your question is one that I ask myself and worked on for a long time (and continue to ponder at times). So, I was writing an additional response (after Jamie's response in the comments) and it got so long I decided to post it. I hope you don't mind. As Jamie said, experience is a key factor. Additionally, the following observations may help.

1) When I use a non-dynamic WL (not tweaked day-by-day) I typically focus only on the top & bottom ~10% based on %change (per Jamie's recommendation). Example: For a WL of 50 stocks, I will only focus on and trade the top & bottom ~5 sorted by %change for any given day. Of course the stocks that appear in the top/bottom will change or rotate day-by-day. Using this approach alone (without pre-market planning), I find good trades but my confidence tends to be a little lower and I am slower to initiate.
2) Pre-market analysis of the daily charts from my WL stocks will add some confidence. Example: Suppose I have noted 2 days of range contraction in stock Z. If stock Z happen to show up in the top/bottom %changers, I am ready and more aggressive in initiating a trade.
3) Pre-market analysis and day-by-day tweaking of a WL (based on EOD scans, etc.) can also improve confidence and increase the number of good setups in your WL. However, often what I predict should move, does not; and what I don't expect to move, does.
4) A TraderX like method is to build your entire WL from gaps or other highly active scans just after the open. This is fruitful but can lead to trades in stocks that are not familiar.
5) What I have been doing of late is a hybrid method. I keep a very small core WL. I add to this using scans for gaps and highly actives during the first 15mins. From the scans, I tend to select stocks that I recognize or have traded before.

Today I had a WL of less than 25 that included: CLF, X, NKE, SOHU
Notice that Jamie traded X, NKE and SOHU today. My focus was on CLF (top of my %changers) and SOHU (bottom of my %changers). The result on a choppy day was two great long trades in CLF and a short trade in SOHU. I'll bet you can pick out the two longs in CLF and Jamie posted the short in SOHU.

So, shift your focus to the extremes of your WL - it makes a lot of difference!

The X-List - BAIDU.COM, INC. (Public, Nasdaq:BIDU)

BIDU has been on my watch list since exhibiting range contraction on the daily chart in mid-to-late January. I caught a nice trade on Jan 28th. Since then, it has displayed whippy consolidation action until today. Early today, BIDU was my %change leader and drew most of my attention.

The daily chart (left) was a nice setup - notice the convergence of multiple moving averages - leading to today's gap up. The 10 minute chart (right) has key levels highlighted. The first entry (first arrow) easily fits under Trader-X's New Simplified Rules (ah, but which setup?). I entered on the 7th 10m bar, although an aggressive entry could have been made off of the 5th 10m bar. The first exit was at the 1.38 Fib extension. The second entry was off of a narrow-range inside bar at the opening range high (ORH) which gave much lower risk than the first entry - also exited at the 1.38 extension, but it almost reached the 1.62 extension.