This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I traded D.R. Horton, Inc. (NYSE: DHI) as an OR breakout short. I saw all of the homebuilders getting whacked after news of Lennar’s 73% profit decline. I used my trade box limits as I discussed yesterday. This one set up early, so I only had a bit over an hour for the trade to move. I didn’t have to wait that long, though:
The 4th candle closed $0.01 below the OR low, and the next took out that candle low, so I shorted. It reversed as soon as I was in. I’m pretty much sucking at my trading this month, so I’m changing my trading status, only allowing to manage my open swing positions for the rest of the week. I need another regroup, as I’m clearly not doing well, even after last week’s hiatus.
I’ve been playing with Bid/Ask Volume (BAV) Trend, an indicator in Quotetracker, and I saw this after I was in:
The BAV trend was up, so more volume was going at the ask. Coming after such a big decline, that would seem to be short covering, and I guess I got squeezed. You can see the divergence of BAV trend and price from the 4th candle of the tick chart on. Price made lower lows, and BAV made higher lows. I’m starting to think this could be a leading indicator for price direction. More research to follow.
Trade Summary:
DHI Short 148 Shares
Entry: $22.03, Stop: $22.26, Target: $21.51
R: $34.04, Exit: $22.26
P/L: -1.00R, or ($34.04)
Trade Grade:
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| DHI |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
March 27th, 2007 at 2:42 pm
For me anyway, it pays off to wait for round numbers like 22.00. Then you at least know how many bids may be hiding there.
March 27th, 2007 at 4:13 pm
I didn’t think of that at the time. I need a rule: respect round numbers!
March 27th, 2007 at 5:50 pm
Beazer Homes is down 17% in after hours! http://biz.yahoo.com/ap/070327/beazer_homes_investigation.html?.v=6
It’s one of the three homebuilders I considered (DHI, BZH, and TOL) for the trade today. Not that I would have caught the move, but still…
March 27th, 2007 at 8:41 pm
Prospectus, thanks for posting your trade. A couple red flags I saw were a very wide range 1st candle, starting 4th day in a row down, and right at daily support (March 13,14). Perhaps a break and retest of 22.00 would have been the play on this one….if it broke.
March 28th, 2007 at 1:19 am
Great post, Prospectus.
Wow, this site has really changed and for the better. I like the new look and the content being written by several contributors. Great stuff.
March 28th, 2007 at 10:54 am
Thanks, Michelle, I’m glad to hear you like the changes!
March 28th, 2007 at 12:03 pm
[...] I bit too soon–I should have held out for $4.10 or so to make sure it would move, but the round number got me again and I bought like a sucker. The bad entry is bad, the position size makes it really [...]