I was away from my screens for most of the day. When I did get in (about 3pm EST) I was amazed by what a low volume day we were having. I looked around, and saw what I thought was a compelling trade idea on Steel Dynamics, Inc. (Nasdaq: STLD).
Here’s the chart:
My thinking went like this:
- a pretty clear-looking double top was formed earlier in the day
- price fell below the trough between the double tops (the “textbook” place to get short the pattern), but was stopped cold at 39.40ish.
- so, perhaps a lot of eager traders were trapped short, and would need to cover at EOD
- a box play had formed since the double top failed to follow through
- I thought, after an upward breakout, chances were good that round number 39.50 would serve as support, mid-channel.
So, I decided to play the box play on an upward breakout. You can see that I didn’t get to my target. There’s no way to know if my theory about the short sellers was correct, but there was a big surge of buying pressure at the end of the day (see the last volume bar). And, thank goodness for it, because it allowed me to get out for break-even in the final seconds of the session. I have yet to lose money, much less be stopped out, on a box play. I really like ‘em!
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| STLD |  |  |  |
