Jun 28, 2007

PENX - Long

In what I considered to be yet another boring day I was able to get in on a risky - but successful - trade in PENX:

  • Placed fib. lines from 1st bar low to high
  • I watched price retrace down to the 61.8% level, consolidate a bit and then in one solid charge move back up and above the 38% level
  • This is where I thought the trade was risky. There wasn't a ton of overall volume (much less than what I like) at this point and a good chunk of volume came during the 11:15 bar which was also at the $24 level. I waited for a better entry
  • Price consolidated yet again above the 38% level
  • I entered on a break of the 11:25 hammer with increased volume
  • Price quickly shot up but there was a huge difference in the spread which made me very nervous
  • I sold once price hit the fib. ext.


Tom T. said...

oonr7 - my scan this morning returned 65 candidates - and that is with a 1.39% gap and avg. vol over 350K. I missed PENX - my question is how did you narrow your list to find this or did you wade through alot to find it - since it was a huge gap on top of prior volume in the tens of thousands I imagine you scanned for big gaps as opposed to smaller with higher volume? For so many stocks gapping up there less than 5 good setups that I found - none of them which I took.

OONR7 said...

tom... I use prophet.net and scanned for stocks that gapped up from yesterday's close (at least .4% higher, vice versa for shorts). I then sort this list by virtual volume - a nice feature prophet has to 'project' what the volume may be at the end of the day based on the current volume. I do this for gaps up and down. I only take stocks whose virtual volume is at least 1 million shares. From here I look at the :15 chart (over 2 days) and quickly eliminate stocks that don't have price increments of at least .10. I also nix stocks whose entire candle on the first :15 has not gapped up or below the previous close. I like to see a gap. I also kill stocks that have already hit the intraday fib. ext. before a good entry candle forms (just feel the move may be over by then and an entry afterwards, especially if price falls back down, is riskier). From there, I just look at patterns. I liked PENX because price stayed in the upper third of the OR.
You can also look for gappers above the previous close AND above yesterday's high or low.

OONR7 said...

tom: I should also mention that I usually scan stocks that have traded at least 100k shares from the open and have an average volume of 100k. However, I removed both those criteria this morning to see how it would affect my watchlist. Since I scan based on virtual volume, I should be getting the same set of stock as before... but possibly some good surprises. That's what PENX ended up being, a good surprise. I just looked and it's average volume for the last 30 days was 16k... practically nothing.

JerryC said...

Great trade. This was the stock I monitor if I was to trade today. But I dont think I could of done any better than you. Because I will usually jump in at a full bar. However, I will learn to do as you sometime.

I am having Mr.Jack kicking my behind if I don't follow the rules I learn.

Jamie said...

Nice work,

I like the price/volume contraction on the dip and the volume spike on the breakout.

OONR7 said...

@jerry: I really was thinking about entering on that first big push as it met all my criteria. However, it closed at $24 and the high/low spread was much high than 1%. So, I was hoping for a better setup which happened two bars later.

@jamie: thanks... yeah, volume all but dried up before the big push. I was looking for some more volume behind the move which happened during the consolidation.