End of the week. The markets are getting dull. Earlier in the week I noticed some buying on the dips that had some volume but not in the last couple days. Today, Friday saw some intraday breakouts to the upside that failed. When breakouts start failing it is a sign to beware of a possible reversal in the averages. And if haven't mentioned it in awhile, the averages are all important to the trader. If the averages turn down it is damned difficult to make money on the upside in most stocks. It makes it hard to find those sustained trends that allow you to get in late and get out early and still make a profit...
"Buy late and sell early".....
I'm getting mixed signals. For the past few months I've paid attention to Deutche Bank (DB) and silver (SLV) for my signals as to which way the broad averages would go. Those two still look reasonably strong. BUT.....I bought a few shares of VXX today at the close. A well defined stop loss below the recent lows.
It looked intraday like someone was looking for buy stops above recent highs in LLL. The price barely went above the channel and then sold off. Sometime when something on the chart is obvious you have to expect that others will "run the stops". ie, push the price up in anticipation of buy orders above the market with the intent of selling into those buy orders. So I usually put on a small position as the run starts and only add to it if the price is able to hold up there and move higher.
Some of the best breakouts are in cases where there is a breakdown from the promising pattern and then a quick reversal and up through the pattern. Here is LLL.....
One of my favorite ways to get position in a stock is to start to buy as the stock is coming out of a consolidation and moving back towards the top of a range. ADY is an example. It narrowed down to a fine coil and has started up in the last couple session. If the general market holds up it may go to the top of the recent range. If not then it will break down and I'll take a small loss. The perfect trade would be for it to go back up to $4, have a further consolidation of declining volume, then buy some more as it goes higher. They don't usually turn out perfect however!
Merlot 181 !!
gh
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All comments are appreciated as it will give me a chance to adjust my content to any real people who may be out there. Thank you. gh