WEBM..for microtrading (daytrading) on volatile stocks I use the 5 and 15 minute chart. I have a 60 and daily chart as well but that's really to see what (if any) pivot points are taken out in the daily with these moves in the intraday.
If you look at the WEBM 5 minute chart you can see the 9:50 time frame is when we begin trading usually and you can see that breakout there and the attempt to close the gap down..
We did not go long WEBM simply because we were watching other stocks on the watch list and playing these so I'm showing you the time WE WOULD HAVE ENTERED if we were following WEBM from the get go..
Since we didn't the next best entry would be the move above the 20 PERIOD MOVING AVERAGE at 61 3/4 for the upside until the spike high at 65 3/8 at 11:30 which was the beginning of the doldrums. This is how I use the 20 period moving average. on the 5 minute chart. Now if you put up a 15 minute chart you would still have that move up at 9:50 or even 10:00 but it wouldn't necessarily be a break above the 20 period moving average which is of course way above the entry. So you would have entered here based on the 10:00 30 minute high which is another of our strategies for more conservative traders. Therefore, if you entered WEBM long at 62 (I use the 5 minute and so do my traders)..you still would have upside until the spike high at 11:30.. from where WEBM reversed. (You can also use the 10 minute chart)..
For volatile and/or high flying stocks like NUAN, WEBM, ONIS, AMCC or any high flyer, I would use the 5 minute chart. The 15 I reserve for sedate plays like XL, SLVN, JILL, etc. Anyhow at the drop from the 20 period moving average at 63 7/16 was a short trigger, this was NOT THE PRIMARY SHORT TRIGGER which was below 64 3/4, the low of the 1:05 bar or even 64, the low of the confirmation bar (the 1:00) bar.. so here is where the 20 period moving average comes in. It usually is a 'major' support level on the 5, 10 minute chart and drops from there are usually shortable and rises above there are usually long set ups. Another support level or resistance depending where it falls, is the 200 period moving average and in this case for WEBM it was the next support level below the 20.
IVGN, one of the plays we called at 2:30, llustrates this more clearly,as it uptrended well and it spiked at the doji at 2:55.. of course we don't go long/short over and over.. we leave that for the scalpers.. We like a trend to last 1/2 hour or more but today was not as easy to spot longer intraday trends.
In fact we did say that we expected both DCTM and IVGN to power up in the event of a 3:30 breakout and IVGN powered up as did DCTM. WEBM by this time was dropped from consideration because we moved the emphasis to SNPS, GILD and IVGN. but in any case you can see with the 5-minute chart of GILD how important is the 20 period moving average.
How do we determine if a really important breakout occurs? We look at the daily chart. In IVGN, DCTM and a few others we saw some good resistance penetrated like the 200 day moving average in DCTM and IVGN the 20 but also it came closer to the important 80 level where IVGN would have broken that consolidation after a failed attempt to break the ascending triangle formation to the upside on 1/31 2/2.. led to a basing for much of February.
That also shows why during the month of February so far,we have not been in any swing trades in IVGN. We might be in one now. We also like GILD for more upside. |
