Trades 07/Oct/2008

Initial Watchlist:
AAP,ABX,ACI,ANR,ASML,AZN,BHP,BP,BTU,FFIV,GG,MEE, NXY,PM,POT,PWE,SAP,SLB,STP,UL,UN,VOD,WLT,XTO

Today there are a couple of trades to report. And they are a bit different. It is something that I have been working on (watching and paper testing etc) and tried it today for real (less position size). It is still based on gappers and NR bars, consolidation etc but they are trades against the gap (i.e gap fades). The other main difference is that they are within the previous day's range.

ASML (gap up)

After the gap up the first bar is weak and holds below the previous day's range. We move down to the ema and get some support. It is a downtrend, so we are looking for a pullback. This happens on the 4th and 5th bars. The 5th is NR3, NR7 which closes below the ema. This is our short trigger.

Entry: 16.24 Stop: 16.55
1R=15.93 2R=15.62 3R=15.31

We move down nicely after entry and get to 1R where we take partial (whole number is nearby) and leave the rest to run. This comes back on the pullback and stops us out for breakeven on the 2nd half. Shame really as it then carrys on and moves down again.

PWE (gap up)

After the gap up the first bar is red with some strength. This is overrun though with the 2nd bar which shows a lot of weakness. We move down to the ema and try to get some support. It is still a downtrend though, so we are looking for a pullback. This happens on the 4th and 5th bars. The 5th is NR7 longish wick which stays below the ema. This is our short trigger.

Entry: 17.82 Stop: 18.11
1R=17.53 2R=17.21 3R=16.95

We move down nicely after entry and get to 1R where we take partial and leave the rest to run. We carry on moving sideways and/or down with the market for the rest of the day. I closed my second half position towards the end of the day at the 3R level.

Just the two trades. Essentially they are just downtrends with pullbacks to the ema, and trading in the direction of the market. You could probably say that a lot of stocks would have done the exact same thing today (another red red day). Overall, pleased with two gainers. Keep it steady and slow, that's the name of the game at the moment.