Out of all the potential plays I saw midday yesterday I seemed to have picked the one with the least profit potential. I saw JNJ and was eyeing a short on a lower high since I saw the daily and that stock typically does not have huge range, so when I saw some speeding up in price action I kept it on radar. Unfortunately, I wasn't paying attention and it went without me. I also saw ASPS but could not find a place to enter. OCN/PCP I was also eyeing for a short but didn't get in.
White arrow is entry.
BBY: I saw higher lows starting to accumulate towards the r/g line. I saw that it had flirted with that line before so I bought when it went above the last time it went green. On the 5min I also saw an almost ABCD pattern forming. It was a little slow but it kept making higher lows so I saw no reason to get out. However, I noticed an ascending wedge forming on the 1min, so I became a bit more cautious for any signs of weakness especially with the market being how it has been. I saw a little base forming on the 1min and put a stop for half my shares to below there because I was starting to think this may be a fake NHOD as I detail below. I got stopped out for some profit and put the rest of the shares at breakeven. It then made another nhod but got stuffed and went all the way back to red before going to new highs.
Obviously if I had held through the day I would have made more but I like to keep losses at a minimum and I would have sold at breakeven on all of it if I hadn't sold half when it made new highs. Like I said, if a stock is making new highs it shouldn't come all the way back down and go red for the day.
I will be getting a Suretrader account soon to put real money to work and I look forward to putting my skill to the test.
I have also been looking at what I call NHOD rejections which would have worked very well on many stocks this past week such as ARNA, AGEN, BBRY. It is when a stock barely gets a push to make a nhod but there is no follow through. The thesis behind it is when a stock makes a NHOD, there should be a surge in price due to buyers being able to make new highs for the day. When a stock gets stuffed immediately or almost immediately, it tells me the stock is heavy and it can almost be considered a fakeout to trap longs. In all three stocks above, if you had shorted near that NHOD, you would have been able to hold the short throughout the entire day since after that fakeout the stocks just faded. On the BBY pictures, you can see the slow NHODs it was making before washing out to red. When the stock rebounded and came back to test the prior HOD and went past it, that is what a true breakout should look like, a nice surge in price upwards.
Things to work on:
1. Try not to get distracted when watching potential plays.
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