Chart School


Thanks Eric!

Double Bottom comes at the bottom of the DOWNTREND. Therefore, this is NOT a double bottom.

--thanks, Meena

That is a downtrend. How did the stock make it all the way down to support?

TJ

Meena,

You don't see lower highs & lows ever since November? Or in your opinion is that not enough for a downtrend?

Respectfully,

Jeff

Jeff,

Even if you call this a sideways trend, double bottoms exist, right?

Sideways? That double bounce should execute over the next two months so focus only on the intermediate trend. Look at the moving average -- it's been in a 45 degree angle death dive since November then it bounced twice off a strong support level at 52.5 and after the last double bottom in Sept at 55 it moved all the way up to 70. This stock should move back to 70 over the next 2 months unless earnings next week stink. The only problem I have with PLCE is it's poor fundamentals and poor industry group relative performance. Stocks in the same industry group (i.e FL, GPS and DBRN)recently went through earnings and they all dropped like rocks. I am curious who would be willing to hold this over earnings vs waiting for the dust to settle?

Allen,

I'd venture to say neither (hopefully). #1 You shouldn't trade a double bottom until it is confirmed, and #2 if it reacts like you suggest it might, sounds like there wont be any opportuinty either way you cut this one. Too bad...I am going to keep watching it just in case it confirms.

Jeff

I love double bottoms,but I especially like your Vanna White.

Sarah

lol, sarah

Does anybody know Jeffs email? Im guessing jeff.kohler@investools.com

There's a "My Profile" link (upper right-hand area of this web page) that has another email address.

Does anyone want to comment on AVID? The pattern is of interest (i'd call it about a 4 pt bear flag or is that a wavey pendent?), and it appears to be consolidating.

However, over the past few months those consolidations seem to be taking a while to breakout.

With it starting to bounce down off of the 34 resistance, it has some appeal. Just not quite the volume. So I'm looking to pass on it.

Does anyone see something different?

Gary
Boston

Jeff,
Can we talk volume for a minute? I'm looking at EXPD and had this on my radar last week for a bull position. It's rising, but not with the conviction that gives me a nice warm feeling.

I say like, because with an upward trend holding above my trend line, I'm not sure how much volume is really necessary. I have a projected price target of $49 for this. Would this be the case for just having a really tight stop on a trade like this?

Gary

Hi Jeff, et al,

First off, sorry about the tome. I'm soliciting a critique of my entry in a bear trade on CME this week. I hope this can be a useful case-study.

I've been following CME as it's been discussed here and elsewhere (so I can't take credit for the overall analysis). Quick summary, CME has shown decreasing volume as it has climbed back up from a recent low at $510 and approaches $570, the point of a previous symmetrical triangle (forming between about 1/24 and 2/21). This suggests a short-term reversal and possibly solidifying a medium-term down-trend.

Price/candlesticks are showing some weakness as expected Wed, Thu and Fri this week. I'm expecting the market and CME to pull back (breath out), catalyzing a short-term (few weeks) downward move in CME.

On Thursday I bought a put on CME after it ran up to one of it's intra-day highs and began pulling back.

So far the market has shown a little more strength than I'd like but CME hasn't close above $572, my stop area.

Even if I hadn't entered the trade on Thursday I would have entered on Friday as the intra-day chart over Thursday and Friday confirmed a head-n-shoulders pattern, penetrating the (intra-day) neck-line at $566 on Friday.

Although CME closed at about $568 on Friday (above the intra-day neck-line) the trade looks okay to me so far.

Specific questions:

* Is there anything in the set up that would have kept you from entering this trade this week?

* Is it unwise to use an intra-day chart as I've done in the analysis (i.e., specifically noting the intra-day head-n-shoulders pattern)?

* Any other critique and suggestions are welcome.

Many thanks,

mike - seattle

This comment has been removed by the author.

Gary

I dont see much of a bear flag with AVID but I agree it looks bearish. I am watching this one as well. It has been downtrending for two years but recently it is has found support and bounced off 32.5 twice. To the upside it has overhead resistance at 34, 35 and 36. I am waiting for it to fall convincingly over the cliff at 32.5 and then buy an OTM put -- the nice thing about AVID is you have to go all the way back to 2003 to find a possible support level way down at 24.

Hi Gary,

I agree with Allen. I'm not seeing the bear flag. I see more of a sideways channel over the last month between about $32.25 and $34.00.

For me the thing that jumps out on the AVID chart is a strong level of support at $32.25. I'd be interested in a bearish trade if that support is broken.

mike - seattle

Mike:

I tend to place more weight on support and resistance and momentum. I notice CME should have resistance at 570 since it bounced there twice in Jan, and it also has support at @ 561 so your entry point from a risk/reward perspective looks good for maybe a 7 pt move down. One thing I don't like is the three green arrows and the MACD and STO haven't shown any signs of topping off yet. What put did you buy?

Allen,
Thanks for the comments.
I bought the OTM Apr $540 put.

I dont know if anyone is following this (or cares), but I am in the top 1% on the Million Dollar Challenge on CNBC.com, and I am looking for some tips. I put every cent I had into Big Lots (BIG) before earnings. I am looking for some help/tips to launch me up into the top 100 before next Friday. If you think you can help, please post some info here or email me at evenflo269@msn.com. I am sure it is not a big deal and I am sure I will not win, but it is a nice feeling knowing I am ranked #490 out of over 250,000 people playing even if it is complete luck. (I went with a stock pre earnings, at support and in the Retail sector - like I said, pure luck).
stephen

I overlooked the chart and i appreciate for correcting me.
I really enjoy Chart School pls. have them on the blog as often as you can. Also, i'm very much looking forward to OPTION SEGMENT of yours in the Marketcast.
Have a great weekend with Jordan Baby....

Thanks Allen & Mike, I appreciate your comments.

I'm also watching BLUD, CMI, LOGI, MCO, SNDK, ZMH and SLM this week.

In many ways this is a good time to trade because I don't care which direction the market goes. It's helping me to focus on the stocks more and read the levels of support and resistance.

Gary
boston

Heads up -- SLM is breaking out of a descending triangle.

Allen

Hi Mike & Everyone,

I just pulled the trigger on CME.
I bought an April $570 for $19.50 after CME hit 571 for the 3rd time on the one day one minute chart. (I bought on the 12:33 PM candlestick I saw).
$571 corresponds with my downtrending line on the daily chart. I will put my stop in at $573 to protect myself for the day and then reevaluate at the end of the day. If the stock rallies at the end of the day, I will be out quickly with a small loss. And if CME goes down, it sure has a high risk/reward potential, if only I can stick with the trade as it goes down. That is always my problem--chickening out and taking a small profit. I have sabatoged some pretty good trades!!!

Valerie w

Hi Valerie,

Just checked the chart (about 1/2 hr after your post) and CME is at 567 as I'm sure you already know. Just wanted to say congratultions on what appears to be a great trade and fabulous timing. Kudos to you for being so patient!

Jodi
Canuck

Valerie,

Excellent patience and self-mastery. I'm trying to take a lesson from you on those.

mike

Congratulation Stephen! From listening to the commentaries, that's how the winners have done it is take low probability high return trades and put most of their money into one or two stocks.
Good Luck!

Oops..strategies. I need spell check.

Sarah

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  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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