Strictly Buy and Sell Set Ups Message Board

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Strategies & Market Trends : Strictly Buy and Sell Set Ups

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To: ZJOHN who wrote (13341)	6/28/2008 7:45:36 PM
From: chowder	Read Replies (3) of 13449

>>> Can you post some potential plays if you have time sometimes? <<< I used to post all of my trades "in advance" and explained the analysis behind the picks, the position size and the price targets. It was too time consuming. I'll post a trade set up from time to time so others can see what I look for. One of the set ups my scan shows today is APWR. The price break out above the green line on the chart below was on huge volume. This indicates institutional buying. The price break out came off a nicely formed base over a 4 week period. (The left edge of the green support line.) The break out saw a wide range bar on huge volume with price closing near the high of the day. This is what break outs should look like! Price has consolidated back to that break out point, on lower volume. This is bullish. All it indicates is that some people have decided to take some profits off the table. The lower volume indicates that institutions are sitting tight. This is where you expect some buying to show up in the next day or two. The trade set up is to wait for price to start rising. The trade is entered once price can trade above Friday's high of the day. (Above $27.00.) I don't jump the gun. I wait for price to prove it can overcome immediate overhead resistance which is Friday's high. If price can do that on Monday, then you have upside momentum and the odds are good that momentum will continue. If the trade triggers above $27.00, I then place an immediate stop loss below the green price support line. (Below $24.00.) You use the measuring rule to determine profit targets. The distance from the break out to the recent price high is about $7.00. Your profit target should be $7.00 above the recent price high. Since the price high was close to $32.00, I look for a price target of $39.00 on APWR. Using a margin of error, I'll set the price target at $38.00. The profit target is $11.00. (Enter $27.00, sell $38.00.) The stop loss is $3.00. You have a risk loss ratio of almost 4 to 1. This is very good and is what makes this a good set up. Since I have a good risk loss ratio, I will take a full position. I will sell 1/2 of that position as soon as I get a $3.00 profit. I will then move the stop up to the entry to insure the second 1/2 position does not lose money. This is how you control risk. If the volume is exceptional at the $3.00 profit target, I may adjust and not sell anything. It just depends on price action at the time. Once in the trade, I won't do anything until the profit target is hit, or the stop loss.

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