LDK Breakout

Huge surge here. $65 to $70. A.k.a 7%. Notice the breakout occurred at exactly $65.00, which is yesterday's low.

AAPL Teases, Finally Breaks Down

AAPL formed a descending triangle this morning. It looked as if it had fallen through the floor and was about to head lower, but then it turned and bounced back above the line of support - what a tease. This is what is called a bear trap. If you're playing breakouts/breakdowns, you need to watch out for these. About 30 minutes later AAPL reached the tip of the death triangle and finally broke below support.

Later in the day, AAPL formed yet another death triangle - coincidentally the sloped portion of the triangle was formed using the exact same line as the morning death triangle.

Day Trade RIMM

It's been a crazy ride for the market lately - today was no exception. Currently I have all my money in cash, waiting on the sidelines. The market can't quite figure out where it wants to go, so I'm waiting until it figures it out. The recent volatility, however, makes for great day trading.

RIMM is a great stock to day trade. It is highly liquid - usually the spread is only one or two cents. The stock has a tendency to "broadcast" its next move, with clearly recognizable, tightly-formed patterns. It seems to have a particular affinity for the descending triangle formation.

RIMM & CSCO Breakdown

ATVI BREAKDOWN

RIMM One-Minute BREAKDOWN

Check it out - about a 2.5% move could have been captured.

Mastercard BREAKOUT, Intraday

Yesterday I put up two examples of a BREAKDOWN. Here's an example of a BREAKOUT!

BREAKOUTS / BREAKDOWNS - Layin' the SMACKDOWNS on some PROFITS

Ever heard of a breakout? No, it has nothing to do with acne, prison, or that awesome movie from 1995, Outbreak. In the trading world, a breakout is when a stock breaks above resistance and gets jacked up to new highs.

How about a breakdown? It's the exact opposite of a breakout - a stock falls below support and gets beaten down to new lows. They are the same, however, in that they each can make you some serious profits.

Breakouts / Breakdowns show up on all timeframes - weekly, daily, and even all the way down to one-minute charts. Here is what a breakout looks like:

And a breakdown:
As an example, I spotted this breakdown in AAPL today, on a 1-minute chart:
Another example, a breakdown in LDK Solar, 1-minute chart:

Making Money with POT

Potash Corporation of Saskatchewan, symbol POT, "is an integrated fertilizer and related industrial and feed products company" (Google Finance). The stock has more than doubled since January. Today it popped almost 5%.

At around 1PM a huge surge of volume came into the stock, sending it flying high. This was an excellent day trading opportunity. It broke through the highs of the day as the volume increased. If you had seen this developing, or had your trading software alert you of the movement, you would have made sweet profits. If you had bought 500 shares as the stock was making new highs at around $107, and sold near $113, you would have made about $3000.

This week I have noticed several setups exactly like this one. A stock breaks above consolidation on higher volume and surges higher. I think you could make good money day trading like this, especially if you have good trading software that will alert you when these opportunities arise.

Check out the 5 minute chart and the 1 minute chart of POT today:

Getting a Share of the Apple Pop

Apple, AAPL, was up about 7% today after they announced another tremendous quarter. AAPL has more than doubled this year.

Let's say you had decided to trade the earnings and purchased $5000 worth of AAPL yesterday. This would have been moderately risky considering the huge run that the stock has had. Today you would be sitting on a $350 profit.

Let's say you're a day trader and you didn't play the earnings. I spotted a great opportunity for day traders this morning. If you wanted a share of the AAPL pop, this was your chance. During the first 7 minutes of trading this morning, the stock sold off as everyone took profits. It sold off from roughly 189 to 184. Then you can see the stock begin to reverse on the chart. Two hammers (a candlestick pattern) formed as the selling subsided and buyers came in. This was a great entry point for day trades. If you had day traded with $50,000, you would have made roughly 1%, or $500. Check out the chart:

Volume is Critical for Day Trading

I'm no expert day trader, nor do I have much/any experience day trading; however, I have been watching the daily price action in LDK Solar, symbol LDK (I sound like the Holiday Inn Express commercial). First off, check out the huge surge in volume the stock has seen in the last 2 weeks.

Like I said, I've been watching the daily price movements in the stock - and I've seen a lot of good opportunities for day trades. Today, however, I noticed something different. The volume dried up. The 1-minute candle chart was no longer revealing these day trade opportunities due to the lack of volume. If you look at the 1 minute candle chart below you'll see what I mean. In the middle of the day volume was very low, and the candles look like scrambled mess. In the afternoon, however, volume picked back up and the candles began to look organized. Organized enough to give good signals for trade entry/exit.

The moral of the story: One day a stock may have high volume/liquidity and be a great candidate for day trades. The next day that same stock might see decreased volume and you might as well be trading it blindfolded.

$200 in 15 Minutes: Combining Candlesticks, Trendlines, and Support/Resistance for a Successfull Day Trade

At around 2PM today I checked an intraday, 1 minute chart of RIO. I saw a nice short trade setup developing. I said to myself "If I weren't working right now, I would short 1000 shares at $32.10." I checked back every few minutes, monitoring my hypothetical trade. After about 15 minutes the stock dropped to as low as $31.77, at which point I said to myself, "If I had actually placed this fairytale trade, I would cover right now." Depending on the order execution, this trade would have been worth between $200 and $300. Not too bad for 15 minutes in the market.

I used candlestick formations, trendlines, and support/resistance to determine my entry and exit points. I also used multiple timeframes - a 1 minute chart to spot the setup, and a 5 minute chart to eliminate some of the "noise" and take a step back to see the bigger picture. It's quite amazing that the same methods of technical analysis work for both 1 minute charts and daily charts.

Check out the 1 minute chart:
And the 5 minute chart:

DOW Market Carpet

After the market close on Tuesday, September 18th, the day the FED cut rates, I said the Dow Jones Industrial average would "blow by its previous record of 14,000 in the next few weeks." Today that happened, 10 trading days later. The DJIA closed today at 14087, 2.5% higher than the close on the 18th.

Big whoop - I called a 2.5% move. The problem is, I didn't put my money where my mouth was. I should have gotten long the Dow. How does one get long the Dow? - Diamonds! That's right, buy Diamonds!

Diamonds is actually an ETF that tracks the performance of the DJIA, symbol DIA. My exclamation to "buy Diamonds!" was merely an attempt to engage my female audience (namely my girlfriend, the only person who reads this blog).

Getting to my point, I could have bought some DIA and captured the upside I predicted in the Dow.

Better yet, I could have picked a few of the best stocks within the DJIA and bought those. The market carpet below, courtesy of StockCharts.com, shows the top 5 and bottom 5 performers since the close on the day of the FED rate cut. The top performers, Boeing, Alcoa, Honeywell, United Technologies, and Verizon, were all strong names at the time and would have been easy picks. The bottom 5 performers, Home Depot, JP Morgan Chase, Citigroup, American Express, and Wal-Suck, were all stinkers at the time and would have been obvious stocks to avoid.

Damn You Nokia!

Navteq Deal Guts Garmin | TheStreet.com

I bought 30 shares of Garmin (GRMN) on August 16^th at $88.82. Last Friday GRMN closed at $119.40 and I was sitting on a 34% profit. Oink Oink.

I got a rude awakening this morning when I saw the stock trading near $102, down almost 15%! Nokia bought Navteq, Garmin’s map data supplier, for about 8 billion dollars and some change. The stock also got downgraded by CIBC this morning. Luckily, GRMN found support at its 50-day moving average about a half hour into trading this morning. It is currently bouncing some, trading near $108, but the 20-day MA seems to be acting as resistance. It will be interesting to see where GRMN closes today.

When I first witnessed the carnage this morning, I was in panic mode and almost sold at $103. Luckily I kept my wits – It would have been a better idea to buy at $103, as you would now be up about 5%. I’m going to see how the stock performs going into the close today before I decide what to do.

This news raises some questions: can Garmin maintain its growth in the personal navigation device market with this increasing competition? Is the stock getting ahead of itself (up 92% this year)? Will GPS capable cell phones begin to take market share from Garmin? Apple could release a GPS device, or add GPS to the iPhone. Check out the article below by Marshall Brain.

Apple about to blow us away with a palmtop? | Marshall Brain

No Pain, No Gain - A Stock's Volatility is Key

One of the hardest things about short-term trading is deciding when to exit a trade that is going against you. If you're at a 5% loss, is it time to get out? Should you wait a little longer if you think the trade will start moving in the right direction?

I think it's important to plan exactly how much you're willing to lose in a trade, and then follow through with that plan. It is equally important, however, to know what kind of stock you're dealing with, ie. the volatility of the stock. For some stocks, 5 or even 10% daily price swings are the norm. On the other hand, you have stocks like General Mills - GIS - that will typically move 1% or less on any given day. Therefore if you're trading a high volatility stock, you need to give it a little room to move in order to avoid getting forced out of the trade prematurely.

As an example, take a look at the chart for LJ International, Inc., symbol JADE. At the beginning of the month, this stock showed up on the StockCharts.com Bearish Engulfing Pattern Stock Screen. The stock was also falling from resistance at the 50 and 200-day MA's on higher volume. These were great reasons to short the stock.

Let's say you saw this bearish action and got short at the end of the bearish engulfing day at $7.56. Now you have to decide where to place your stop to protect yourself from losing too much money. A good place for a protective stop would have been above the highs of the entry day, around $8.43. But $8.43 represents about a 12% loss - which is quite painful. When trading a highly volatile stock like JADE - no pain, no gain. I crunched some numbers and found that over the last 10 months, on any given day, the difference between JADE's high and low was on average about 7%. If you hadn't taken this into account, you probably would have gotten scared and taken your loss. You would have missed out on monster profits.

Here's a daily chart, showing the sweet 47% profits that could have been made.
Here's a 30-minute chart showing the pain before the gain:

DJIA Will Top 14,000

I think the DJIA is going to blow by its previous record of 14,000 in the next few weeks.

HUGE Day for Wall Street!

Today was a momentous day for the stock market. Here's a run down:

• The Federal Reserve lowered the federal funds rate by 50 basis points to 4.75% - the first cut in over 4 years.
• The DJIA jumped 335.97 points, the largest one-day jump in almost 5 years.
• Gold is near all-time highs.
• Crude oil has a record close at $81.51/barrel.
  

Here's a look at the sectors that performed the best today, thanks to Google Finance.
Basic Materials stands out - up 5.24% today. Here's a very basic summary of what's happening, from my understanding: As interest rates move down, the dollar as a currency loses value because it becomes unattractive as an investment. Since many commodities are priced using dollars, a falling dollar means they go up in price because it takes more dollars to purchase them. I think this is why we saw such a surge in basic materials stocks today.

Companhia Vale do Rio Doce, symbol RIO, was up almost 10% today, an all-time high! CVRD is a diversified metals and mining company out of Brazil with a monstrous 286 BILLION dollar market cap. This is a stock that has DOUBLED since the beginning of this year. It has been in an uptrend channel for an entire year. After today's jump, I'm hesitant to trade it. The momentum will probably carry it higher, but it is running up against the uptrend roof.
Take a look at the chart:
Freeport McMoran, symbol FCX, is another materials company that has DOUBLED since January. Today it was up over 6%. I think this one might have a little more room to run, and I might have to buy some tomorrow to trade the upward momentum in the stock. It just broke above resistance at $100 on healthy volume. Check out the chart.
The Capital Goods sector includes companies from several different industries, including the homebuilders. Hovnanian, symbol HOV, was up about 28% today! HOV is a homebuilder with about a 900 million market cap. I really like this chart. The stock has been in a downtrend for about 2 years, but it is bouncing from its downtrend floor. Recent volume was climactic, suggesting most of the sellers are out. I wouldn't mind making a small trade on this one, however, the stock could go to ZERO, so I wouldn't put in more than I'm comfortable losing completely. Look at this crazy chart.
As I'm looking through the stocks in these various sectors, I don't really like the way that Google Finance has them grouped. Stocks in totally unrelated industries are grouped together. I need to find a better way of looking at stocks sector by sector.

Trade Using Multiple Timeframes

Multiple Timeframes Can Multiply Returns
This is an interesting acticle on trading using multiple timeframes. This is a strategy I use to fine-tune my entries and exits. The problem is it's sometimes difficult to constantly monitor intraday charts at work - so I rely more on daily charts.

I found this link on the Trader Mike blog.

FLUOR up 77% Since January - Time to Sell?

Take a look at the orderly uptrend in Fluor since the beginning of this year. In January it traded at $75. Today it made a record close at $133.25. That's about a 77% gain - the kind of gain that makes you want to slap your Grandma. Luckily for my Grandma's, I bought 30 shares at $110 - a measly 21% gain.

But 21% isn't bad either. Am I being a pig? Is it time to take profits and move on? Or flip my shares (sell my shares now, then buy them back lower)?

After looking at the chart, I think perhaps I should sell. Here is my reasoning:

• The stock is running up against its uptrend roof.
• Today's candle looks like a shooting star, a bearish reversal candle.
• The stock is overextended - way above its 50-day, stochastics overbought.
• I am satisfied with my 21% gain in under a month.

I want to preserve my gain, but on the other hand, I don't want to miss out on a continued move to the upside. Therefore when I sell, I'll need to be looking for a good time to jump back in, after the stock has "digested" its recent gains and is ready to run again.

Take a look at this sweet chart:

Mixed Signals from Yamana Gold - AUY - To Short, or Not to Short?

Today would have been a good day to short Yamana. Last Friday it finally gave some "bearish confirmation" - a bearish engulfing candle, stochastics hooking lower, and the MACD Histogram going lower. Getting short this morning would have been a great trade - it touched $12 then it was all downhill from there.

Getting short now, however, is riskier. It looks like it is getting support from the 50-day MA underneath. Also, volume was climactic last Friday, and if you look at past instances of climactic volume you will see that it coincides with a mini-bottom - ie. the stock bounces after the climactic volume. A close below the 50-day tomorrow would be quite bearish - I'm thinking that won't happen.

Check out the chart:

DOW Falls 250 Points

The DOW chart is looking bearish. Check it out:

Yamana Gold - AUY - Lessons in Selling Short

Wow. Check out this crazy chart for Yamana Gold (AUY). The stock was up 6.52% today. If you had went long on the day of the "mini-crash" on August 16th, buying shares at $9, you would now be up an incredible 39%.

The stock has been in a downtrend channel since April. Yesterday you may have looked at the chart and thought it was a good time to get short - AUY was bumping up against the downtrend roof, and it couldn't close above it. Today it broke out of that channel on heavy volume.

So how would you have known yesterday that getting short was a bad idea? Simple - you could have looked back at days when shorting ended up being a good idea. Then you would have seen that yesterday, unlike the other days, lacked bearish confirmation.

Bearish confirmation includes:

• Stock falling from 50-day MA
• Stock falling from trendline roof
• Stochastics hooking down from overbought (80) territory
• MACD Histogram heading lower
  

Click on the chart to read my explanation.

Schlumberger - SLB - Making New Highs

I panicked and sold my SLB on August 16th, the day of the "mini-crash" at about $85. Now it's making new highs and trading around $100. That's 17% I missed out on! Me Idiot. I'm thinking about getting back in, but the chart tells me to wait. It is extended and overbought - I think it will trade sideways and digest the recent gains. If it drops enough maybe I'll pounce. Check out the chart.

DJIA Smack-PWND by its 50 Day Moving Average

The 50-day MA is making the DJIA its bitch. Check out the chart. I'm slightly bearish on the DJIA until it can show the fiddy-day who's boss. If it falls, it should find support at the 200-day, around 12900.

Garmin - GRMN - Trying to Make New Highs

I still own 30 shares of GRMN and I'm up about 17% - time to sell? I think I want to hold this stock at least through the end of the year, and possibly longer. So if I do end up selling, I will only do it to avoid a short-term decline - and when that decline is over I'll jump back in.

But how would I know a short-term (1 to 10 days) decline is coming? And how would I know when to jump back in? Very good questions - I would try to anticipate the price movement by examining the chart and the technical indicators.

Take a look at the chart:

I'm going to wait and see if GRMN can power through resistance at $105 - today it tried to break through this level for the third time , unsuccessfully. GRMN has formed what is known as an Ascending Triangle - a bullish chart pattern. The moving averages and the trendline are rising up underneath - they may help GRMN break through. I don't like the looks of the MACD lines or the OBV line, however. They are weakening as GRMN is treading water. If GRMN breaks through into record territory, I may consider buying more. If it closes below its trendline, I may consider selling.

Dow at 50 Day Moving Average

The DJIA closed right on the 50-day MA today. If it can follow through, I think it could make it to 13,700 within the next week or two. The 50-day MA is flat, and it could act as resistance - so we may actually see a drop. We're kind of at a crossroads here. I think you could make bets either way.

Southern Copper (PCU) Technical Analysis, Continued.

PCU took a hit today, along with the rest of the market. PCU was able to close above the 50-day MA on Monday and last Friday. It bumped up against its former trendline, and closed below the 50-day MA today. Check out the chart below - the recent action is interesting - I'm not quite sure where its heading but I'm taking a slightly bearish stance for the next few days.

Dow Jones Industrial Average - Heading Lower Tomorrow

Tomorrow will be interesting for the market. The Dow Jones Industrial Average looks as if it's ready to fall. As you can see in the chart below, it is running into resistance at its 50-day MA and its downward trendline. Stochastics is overbought and hooking down. From the looks of it, the DJI is going to head lower tomorrow. (click image to enlarge)

Wild Action in Southern Copper - PCU

PCU was able to bust through that downtrend roof I was talking about yesterday. The volume, however, was not impressive - and stochastics is reaching overbought territory. I think PCU may have trouble closing above its 50-day moving average - plus the 20-day MA is declining overhead and the former trendline could also become resistance. I'm hesitant to buy here - I'll sit back and watch to see if it can overcome this resistance around $102.


Here's the same chart, but it shows the violent swings PCU has undergone recently. If you had bought it last week at $80 you would be up 25%! If you had panicked out at $80, you would have been down 30% from the top. This is what swing trading is all about - trying to take advantage of ridiculous, illogical, and violent short term moves in stocks. These moves have nothing to do with the fundamentals of the company, ie. their earnings, and are mainly due to the short term mechanics of the market.

Southern Copper (PCU) Chart

I sold my 22 shares of PCU last week, on 8/14/07 at $97.56. I had purchased them on 2/27/07 at $69.57. That's about a 40% gain - too bad I didn't buy more than 22 measly shares. PCU has a dividend yield around 7%, so I might have to buy PCU again before the next ex-div date.

Interesting chart here for PCU. It seems to be running in a downward channel, which began last month. It fell under its long-term trendline, which had been supporting the stock since January. For some reason I think PCU will bust through the channel's roof. I'm kind of hoping that it won't, however, and give me the chance to buy. (click chart to enlarge)

FLR Swing Trade

Last month I swing traded 50 shares of Fluor (FLR). In past posts, I discussed my entry and tracked the progress of the trade, but I never gave a final update after I exited the trade. This post will go over when and where I sold. In case you missed my first posts regarding this swing trade, here they are:

• Fluor Corporation (FLR) - Swing Trade
• FLR Watch
• FLR Upgrade! - W00t W00t W00t!
  
• FLR Update

Here's a table showing an overview of the trade (click to enlarge):
The following chart shows where I bought and sold on a 6-month, daily chart:
This last chart shows a detailed (60-minute candles) view of my entry and exit. You can see that I raised my stop-loss order too high - to $112.50. I should have given the stock more room to maneuver, but I didn't, so I missed out on some potential profits. Regardless, an 8.5% profit in 5 trading days isn't bad. This was a well planned trade, and well executed.

Garmin (GRMN)

I own a Garmin GPS for my car and it rocks. I think they may be poised for a highly profitable holiday season - and the stock could run up.

The stock hit an all-time-high, $105.75, just last week. Today I purchased 30 shares at $88.82 - that's about a 16% drop from the top. You can see my entry point in the charts below.

This is a 5-month, daily chart of GRMN, showing that it is still above it's trendline.

Here's a 5-minute chart showing today and yesterday. You can see my entry point.

OMFGWTFBBQ This Market is Getting Destroyed

I sold my 50 shares of SLB in Pre-market trading at $85.30. Thats 13% down from its all-time-high around $98, which it hit a few weeks ago. I sold my 17 shares of TM for $112.38. SLB is currently trading around $83, TM around $111. PCU is getting hammered, down 13%, trading around $77 - glad I bailed out of that one. RIO is down 9% and trading around $36 - unbelievable.

I couldn't resist my urge to start small positions in Garmin (GRMN) and Fluor (FLR). Probably not the best idea to go long in this market - but if they drop I'll just buy more because I don't mind investing in them long-term. I bought 30 shares of GRMN at $88.82 and 30 shares of FLR at $110.

Materials stocks are getting hit the hardest. Consumer stocks are doing well. Pepsi (PEP) and Procter & Gamble (PG) are actually up today.

At this price, PCU now has an 8.3% dividend yield. That's hard to resist.

This Market is Buck-Nasty

Wow. Today's market is pure ugly. Stocks that led the way up over the past few months are now getting clobbered. Check out the destruction in RIO, POT, FLR, and PCU. Good thing I sold my PCU yesterday - it's down 7% today. I still have SLB and TM. SLB is holding up alright and TM isn't faring as well. I don't like this market action. I think it's time to sell and let market work out its problems. I may consider shorting if the market bounces in the next few days. I don't have much experience shorting - I usually only monitor high quality, market-leading stocks. Guess I'll have to start looking for some real stinkers.

Don't Panic

Jim Cramer always says "Nobody ever made a dime panicking." I'll give you an example of Jim's advice in action.

On July 24th my Scottrade account was at an all time high. Then came the market sell-off - my stocks got hit pretty hard (SLB, TM, and PCU). On Monday morning, I was $900 poorer than I was on July 24th. I was cursing myself for not selling at the top - for not avoiding the $900 "loss." I experienced fear and panic as I watched my account get a smackdown. By Monday, I'd had enough and I was seriously considering selling everything to avoid more losses. Luckily I managed to keep my cool and stay in the game - yesterday and today my stocks bounced hard and now I'm only $300 from my all-time high. That's a $600 bounce in 2 days. W00t W00t!

The lesson: If you begin to panic as you see your account rapidly lose money, it's probably not the best time to sell. The time to sell was at the top, but too bad Champ, you missed it. Wait for a bounce instead of freaking out like everyone else.

This all has to do with greed and fear. Here's what goes wrong: As you watch a stock skyrocket, you get greedy and wish you were making money like everyone else - so you unwittingly buy at the top. Then everyone starts bailing, your stock plunges - you panic and sell at the bottom. Check your greed and fear at the door - Sell on the way up and buy on the way down.

DE Gets a Smackdown

DE climbed to $126 earlier today, then it got a smackdown - closing near the lows of the day at $120.42. The volume was above average. The market behaved in this same manner - at one point today the DOW was up 138 points (+1%), but it closed down 146 points! Not good. We may see more downside tomorrow. Here's a daily chart of DE:

DE Update

I didn't end up placing a trade on John Deere (DE) on Friday. If I had placed a trade at my planned price ($122), I would have been stopped out - the stock dropped as low as $118.71 (2.7% less than $122). The market was bad, and it wouldn't have been a great idea to place a trade the day after a 311 point drop in the DOW. Yesterday (Monday), the stock traded in the same range as it did on Friday (Low:$119, High:$123.15), and closed near its highs. Buying some DE yesterday afternoon would have been a prudent trade - it was closing near its highs and MACD and Stochastics were looking just as good as they were last Thursday. This morning the stock gapped higher and climbed up to $126, where it met resistance at its 20-day MA. It dropped and is now trading at $122.50. Volume has been lackluster. I think 5% could have been squeezed out of this trade ($120 to $126), but the stock has been volatile, and the risk of getting stopped out is high. DE may start to climb, but I'd like to see more volume.

If DE looks attractive for a swing trade at $122, then why didn't I buy some at $119? Good question. One reason is that you shouldn't try to catch a falling knife. If you buy a stock on the way down, how do you know you're buying at the bottom? or that the stock won't continue to drop? There seems to be less risk in the trade if you make sure the stock is going to bounce. Another reason has to do with psychology - when you see DE drop to $119 you think: "I'm glad I didn't get in at $122, I would have lost money, I think I'll just stay away from this trade." If you're willing to take the risk, then anticipating the bounce before it happens probably isn't such a bad idea after all.

John Deere (DE)

Several stocks are running into their 50-day moving averages after the nasty day of trading today. RIO, POT, and MON are three I've seen. Another one is John Deere (DE). These could be good swing trade candidates. The bearish action today (DJI down 311 points) has me a bit scared to throw money into the volcano. Here's a chart of DE. I might man up and buy some tomorrow if it acts right. Click the picture to see full-size.


It closed today at $121.02.

It has key support at $120 (-1%).

It could hit resistance again at $132 if it bounces. (+9%)

That's a risk/reward ratio of about 1/9 - not too shabby!

I might buy 60 shares x $122 = $7320. I'll put a protective stop order at $119.90 (-1.7%, -$126) My price target will be $132 (+8%, $600). That's actually about a 1/5 risk/reward. The stock was quite volatile today, and it could be tomorrow, so getting stopped out is a concern. Timing my entrance will be key. If it takes off, I'll raise my stop along the way. If the market looks nasty again tomorrow, I might just wait it out and see how DE behaves. Could drop.

FLR Update

Here's a 10-day, 30 minute candle chart of Fluor:

FLUOR Upgrade! W00t W00t W00t!

This morning I was pleasantly surprised to read that Fluor was upgraded by an analyst at JP Morgan after yesterday’s announcement that Fluor will be awarded part of a multibillion dollar U.S. Army Contract. Read the story here:

http://www.forbes.com/feeds/ap/2007/06/29/ap3871215.html

Catching this upgrade is like winning the swing trading lottery. It adds instant profits and allows me to lock in those profits by raising my protective stop order. The stock jumped up to $108 in pre-market trading, and is now up to $108.86 (the market opened about 10 minutes ago).

Whoa! In the last few minutes the stock has reached $110.72. It has broken through resistance and is now above my price target of $109.90! If I sold now at $110.72, that would be a profit of +$363.50, or +7% - not bad for 2 days! But I think FLR could see some more upside within the next few days, so I’m going to hang on for the ride. I’ll place a stop-limit order to lock in a profit in case FLR starts to drop.

I’ll put the stop 2% lower than FLR’s current price, at $108.45. I’ll put the limit 10 cents below, at $108.35.

FLR Watch

FLR got all the way up to $105.50 this morning, so I decided to put in a stop-limit order at my break-even price (to cover $14 in commissions). You can see my order above. If FLR drops to $103.78, my stop price, it will trigger a sell order. This sell order will have a limit price of $103.73, meaning I will not accept a sell price lower than $103.73.

The advantage of putting in this order is that I have no chance of losing money on this trade. The disadvantage is that FLR could drop to $103.78, and then skyrocket up to $110 - thus I would be stopped out of the trade and then miss out on some potential profits.

With FLR at $105.50, that would be about a $100 profit if I sold. It's tempting, but patience is key.