| Technical Analysis Day Trade Setups Weekend Updates 3 |
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| Saturday, January 20, 2007 |
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Weekend Update - Short Term Trade Rectangle/ Slim Jim Setup - CXW
During a typical 5 day trading week at Trending123, I will normally come up with a handful of short term trades to enter for sudden profits. This is week 2 of our short term trade setups. This week, I want to give you a handful of some stock charts to study in advance. Which will be great, because I really enjoy playing a handful of short term trades for "sudden profits." These are charts of some possible some short term trades that we will enter and play over the next two weeks. The stock market returns to its normal 5 day trading week starting January 22nd. Please read the section that defines an Upside Breakout Classic Pattern at the top of the page above the charts below.
What defines a short term trade?
A short term trade is one that is held for less than two weeks with a possible price gain of 5%, 10%, 15% to 20%. You may use an equity or an option for these trades.
Patterns used for short term trades :
- upside breakout pattern
- bull flag pattern
This is what you need to know about each stock in order to prepare for the trade diligently before each buy trigger / entry:
1. What is the stock's ticker symbol
2. What is the stock's average daily volume
3. How far is the stock above it's EMA moving averages (i.e.: 13 EMA, 34 EMA)
4. What' is the stock's short ratio
5. How far is the stock off from it's recent highs (i.e.: -1%, 5%,-10%,-20%, etc)
6. What pattern is the stock in on the daily chart
7. What Type of Tend is the stock in (i.e.: bullish or bearish )
8. What direction is the stock in up or down?
Trading Journals - Use these to keep track and monitor your Trades
- The original Trading journal sheet: http://www.trending123.com/short-term-trades/trading_journal.htm
- If you want another trading journal format to use other than the one I issued, you can right click on the image found below and copy/paste it to your documents and print it out and use it instead.
- Long live the Organization for the Organized!
Short Term Trade Rectangle/ Slim Jim Setups - CXW
CORRECTIONS CORPORATION OF AMERICA. - Optionable
- Ticker symbol: CXW
- Average Daily Volume : 425,289, notice the massive surge in volume as it hits the top of the rectangle and as it attempts a break out
- price trading above the 13 day EMA
- moving averages have a recent triple moving average crossover
- Short Ratio = 1
- Percentage off recent high's = 1.52 %
- Daily Chart Pattern = Rectangle /Pennant pattern within a larger ascending triangle pattern
- Trend = Bullish continuation pattern
- Wave = has completed a wave 3 to wave 4 pullback to the uptrend line, possible bullish continuation wave 4 to wave 5 move upwards an a break out of the rectangle
- Direction = consolidation / upwards
- PPO, and Aroon just had a bullish crossover = Bullish action
- all indicators and oscillators are in a 123 bullish trend reversal
- Trade Set up = Possible short term long play
- enter trade once CXW takes out the previous day's highs = $49.90 or higher
- stop at a penny or 2 below the lows of previous day = $47.10 or thereabouts
- pivot = $48.72
- Price Target =
- Trade Level = difficult
- we will consult our Options Expert Bill about playing options on this
See you on 1/21/2007 - Sunday Afternoon at 2 PM EST for the live Seminar in the trading room regarding these setups.
Edited by Daisy
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
Upside Breakout Classic Pattern
Implication
An Upside Breakout is considered a bullish signal, marking a breakout from a trading range to start a new uptrend.
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Description
An Upside Breakout occurs when the price of a financial instrument breaks out through the top of a trading range. This technical event indicates that prices will rise explosively over a period of days or weeks as an almost vertical uptrend appears.
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Trading Considerations
Inbound Trend
The inbound trend is an important characteristic of the pattern. A shallow inbound trend may indicate a period of consolidation before the price move indicated by the pattern begins. Look for an inbound trend that is longer than the duration of the pattern. A good rule of thumb is that the inbound trend should be at least two times the duration of the pattern.
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Criteria that Supports
Duration of Trading Range
The duration of the trading range for which the breakout occurred can provide an indication of the strength of the breakout. The longer the duration of the trading range the more significant the breakout.
Narrowness of Trading Range
The "narrowness" of the trading range can also be used to gauge the breakout. To determine the narrowness of the trading range compare the upper boundary with the lower boundary of the trading range. If the trading range has a small difference between the upper and lower boundary (making it narrow) then the breakout is considered stronger and more reliable.
Support or Resistance
Look for a region of support or resistance around the target price. A region of price consolidation or a strong Support and Resistance Line at or around the target price is a strong indicator that the price will move to that point.
Moving Average
Prices which quickly move 50% above the 200-day Moving Average strongly support this pattern.
Moving Average Trend
Look at the direction of the Moving Average Trend. For short duration patterns use a 50 day Moving Average, for longer patterns use a 200 day Moving Average. The Moving Average should change direction within the duration of the pattern and should now be heading in the direction indicated by the pattern.
Volume
A strong volume spike on the day of the pattern confirmation is a strong indicator in support of the potential for this pattern. The volume spike should be significantly above the average of the volume for the duration of the pattern. In addition, the volume during the duration of the pattern should be declining on average.
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Criteria that Refutes
Duration of the Trading Range
The duration of the trading range for which the breakout occurred can provide an indication of the strength of the breakout. The shorter the duration of the trading range the less significant the breakout.
Narrowness of the Trading Range
The "narrowness" of the trading range can also be used to gauge the breakout. To determine the narrowness of the trading range compare the upper boundary with the lower boundary of the trading range. If the trading range has a large difference between the upper and lower boundary (making it wide) then the breakout is considered weaker and less reliable.
No Volume Spike on Confirmation
The lack of a volume spike on the day of the pattern confirmation is an indication that this pattern may not be reliable. In addition, if the volume has remained constant, or was increasing, over the duration of the pattern, then this pattern should be considered less reliable.
Moving Average Trend
Look at the direction of the Moving Average Trend. For short duration patterns use a 50 day Moving Average, for longer patterns use a 200 day Moving Average. A Moving Average that is trending in the opposite direction to that indicated by the pattern is an indication that this pattern is less reliable.
Short Inbound Trend
An inbound trend that is significantly shorter than the pattern duration is an indication that this pattern should be considered less reliable.
FLAGS, PENNANTS, RECTANGLES
Stats
CXW--(Love it, rectangle pattern but its wide and sloppy, much more difficult than playing MICC or AXR it does trade options and could be a possible long stock and/or option play)
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