1/11 SET UP ... ANSS ... Swing trade ......................
As a rule most professional traders buy strength. There are times when buying weakness for a counter trade can be made. Less than 10% of my trades will involve stocks that are showing weakness and you must have a compelling case to take on a counter trend trade.
ANSS is a compelling case.
In early November, ANSS broke out of a nice base and enjoyed a Stage 2 uptrend over a two week period. From the middle of November to the middle of December, ANSS was in a Stage 3 consolidation and towards the end of December, made an attempt to start a new leg up. That rally failed with a huge bearish engulfing pattern right at the price high.
As price fell, the Stage 3 consolidation didn't even slow price down. Price crashed down below the 20 and 50 day moving averages, making every single person who had bought the stock in the previous month to month and a half, a loser. That's why you see the huge volume bars. That was panic as people wanted out at any price.
If you want to see what a picture of fear is, the ANSS chart provides it over the last 10 trading sessions.
stockcharts.com[h,a]daclyiay[d20051011,20060111][pb50!b20][vc60][J66667245,Y]&listNum=1
We're looking at a Daily Climactic Buy Set-up
This set up is for stocks on daily charts that have recently experienced climactic declines on big volume, which renders them oversold and overdue for a sharp rebound.
Since price action has been so weak, I want to be very specific in my entry.
There are 3 potential long set ups.
1. If price gaps down at the open by 50 cents or more and then starts up, buy once price is about 6 to 12 cents above today's close. (Place your stop under today's low if this set up triggers.)
2. If price gaps up at the open by 50 cents or more, buy it immediately or you can wait 5 minutes and buy 6 to 12 cents above the 5 minute high. (Place your stop under yesterday's low if this set up triggers.)
3. If price gaps slightly in either direction or if price opens relatively flat, wait 30 minutes and then buy above the 30 minute high, provided the high is showing positive on the session. (Place your stop under yesterday's low if this set up triggers.)
I'm looking for a profit target of $1.00 to $1.50.
dabum |
