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.
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6 comments:
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.
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.
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.
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.
Nice work,
I like the price/volume contraction on the dip and the volume spike on the breakout.
@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.
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