A Trade A Day

My personal bias is still bearish. I think we have more to drop, but I would like to see the general market consolidate. There are some interesting patterns forming in the weekly time frame. These negative, longer-term price patterns affirm my bearish outlook.

Bear Flag

Breaking down through support here would be significant as price will pierce the daily 200 SMA as well as the weekly 50 SMA.

A symmetrical triangle. Technically, it could go either way, but the head and shoulders pattern formed over the September to January time frame and the overall general market leads me to believe we’ll see lower prices.

I could go either way on PCAR. The daily chart looks like a double bottom where a bounce gives me a target of 47. The longer term weekly chart is a bear flag.

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The market continues its downward spiral. For a week or so, I thought there might be a light at the end of the tunnel. A few long trades later I determined the light was a freight train. More trades once we get a breather.

Instead of trading you should get caught up on what’s going on with Conan…

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Well, today I got smacked around like a rented mule. Yesterday’s post featured four trades that I thought stood a reasonable chance of setting up. Well, they didn’t. This is actually normal. I don’t know why it’s bothering me tonight. I’m not in the business of predicting what is going to happen. I have a method, I filter for trades based on that method. If the stock sets up, it sets up. If it doesn’t I move on.

What allows me to do this day after day is to trade small and trade consistently. Trading the same way, day after day. I may not trade every day, but I trade with the same rules and the same setups on each trade.

Before, I sit down to write a post for this blog, I have an extensive “process” that I go through to sort out the next day’s trading opportunities. It’s arduous. It’s manual. But it works and I’m not going to change it.

I’ll write it up someday and share because I think it’s interesting to talk about. For now, I’m going to share a few more trades that won’t work.

Here are three for your consideration.

I don’t really like much else. I expect there will be some better trades in the days. I just need some consolidation.

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I have four trades I’m looking at for 2/05. They are showing different, but classic patterns. There’s one pattern that makes these trades unique. Do you know what it is? Answer at the bottom of the post.

HOLX looking 1-2-3ish. Setup will be intraday.

Nice Double Bottom here.

Ascending Triangle here.

Just another Flag.

Ok, aside from the 1-2-3, double bottom, triangle, and flag pattern. All of these stocks have NR7’s. An NR7 is a bar whose range is smaller than the previous six trading days. If volitility expands and contracts, then a NR7 is another way to graphically demonstrate that volitility has contracted. It would follow logically that volitility will now expand.

UPDATE: Volatility sure did expand. Unfortunately, price went in the wrong direction.

If you google NR7, trader mike has a good post out there. I’ll write more on this subject in the future.

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Here’s what I’m looking at tomorrow. Just to be clear:

**Trading ahead of the Fed increases your risk**

Having said that…

I’m being more selective than usual when it comes to my setups. I’d like to think this retracement will last a while but who knows. I’m definitely keeping things scalpy on the long side. Yesterday’s leaders are not exerting bullish leadership. What do I have to trade other than the also-rans? I’d like to think that I’ll catch the next bull market’s leadership in its early stages, but we’re not there yet.

Here’s a few long trades I have on my watchlist:

I just like the 1-2-3 on PBR. I will be looking for an intraday setup over 110.40.

I’m not exactly thrilled with the pattern here. But anything that can move up like that to a new 52 week high in this market environment has got my attention.

The weekly chart(not pictured) has my attention. I’ll take my chances over 12.

I guess books don’t do well in a recession, unless we start burning them for heat Then I expect this stock to skyrocket.

Targeting the 200 SMA on this one.

Consolidation after topping out. I will give it a go under the 55.50 area.

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