I started of June in good shape, making 3.5 R by 11:30 EST and then taking the rest of the day off. Hard to beat that (unless you caught the wacky move by NTRI all the way from 66 to 72 and back at the open)!
Trade 1, DCEL
I made a trade literally at 9:30AM today, in the opening minute. Dobson Communications Corporation (Nasdaq: DCEL) was on my Daily Scan as a breakout candidate at 10.69. It opened at 10.68.
Now, normally, I shy away from jumping right into these, because it’s usually too early to tell if substantial volume will be trading in the stock, and too early to see where any potential big sellers might be. But, it gave me some confidence that it traded over 50k shares premarket (if I remember correctly) in a range entirely below the opening price. Good enough. Filled at 9:30AM, some shares at 10.69, and the rest at 10.70. I got back out for a 10 cent gain 5 minutes later. That doesn’t sound like a lot, but it’s a 1% move for a $10 stock, and I didn’t want to press my luck at the open. And besides, it was 2.5 R of gain.
One scary thing I’ve noticed (on scottrade, anyway) is that whenever I trade during the first 5 minutes of the day, the feedback on my executions is delayed somewhat. I guess they have trouble keeping up with the data volume. So, in this case, my platform told me about my buy execution 30 seconds after the fact. Now, as it happens, my order was filled instantaneously and right at the price I wanted, so it’s hard to complain. Except, if the price were to dive during that 30 seconds, I would be unable to sell via my platform (because it doesn’t think I have any shares yet).
Trade 2, AEM
This short trade on Agnico-Eagle Mines Limited (NYSE: AEM) marks my second try in two days to revive ye olde “ema reversion play“. Read that linked post for more detail on the setup, but in any case recall that there are three likely occurrences after price separates from a fast MA at the open:
- The price keeps moving away, and the MA catches up with it
- The price consolidates, and the MA catches up with it
- The price reverses and closes in on the MA
… or some subtler combination of the three. Yesterday, I caught case #3 (the one you want to happen, by the by). Today, I caught case #2. Price drifted around, but never fell hard.
Let’s look at why this was a good candidate. First, on the daily chart, the overall trend is down, but the stock has run up recently. It’s nothing to bet the farm on, but it’s good to note that it would be more and more unusual for the stock not to take a breather, the higher up it runs.
Now, the 15 minute chart. Note that the upper range of the opening bar is 38.02. Note also that the opening bar is wide. So, a short below 38 would be the natural choice. Check out how the second bar is strong, but on less volume, followed by a third extremely weak bar on higher volume.
So, at the close of the third bar, you’ve got a lot of volume trapped above the opening range. They aren’t happy. My hope is that they pee in their collective pants if the price falls under round number 38. This would drive the price quickly down.
Alas, bladder control was the order of the day, and the stock showed bidders willing to step in repeatedly around 37.97 and 37.91. Seeing this, and being no fool, I put in a limit order to take me out for 37.92. I was filled in short order, and took a small profit out of the lackluster action.
As a side note, I was unhappy to see my entry not filled until 37.97. AEM is not a SHO Pilot stock, and is subject to the horrible horrible uptick rule. Oh well, it turned out fine.
Maybe I should have paid more attention to the point and figure intraday chart:
It was not yet showing much weakness at the time of my short. The blue up-sloping trendline was still in effect, though I noted that the movement was getting more erratic (larger red retracements between the green upswings). So that was a warning, but not enough to keep me out of the trade. A little later in the day, this pnf chart gave a short signal (which I’ve drawn in, and which would have given you a few chances to make a small profit).
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| DCEL |  |  |  |
| AEM | | | |
June 2nd, 2007 at 9:10 am
I use scottrade too. I dont think ive ever traded the open. Not out of fear, just havent seen a position i want to take at the open as of yet. But i have seen problems with sending orders too.. Nothing to say the game is rigged, but its usually those moments that begin a panic in me, and then i start thinking.. ahhhh.. gotta get out, luckily i hadnt given in to the emotion yet. I was wondering if any of you guys saw the rise in AOC. I allready had a position in it, so i wont call it timing, just darn good luck that i was in it at the time.
June 2nd, 2007 at 9:39 am
LOL, my bad.. it wasnt AOC that i had, it was LFG… please forgive Im new to this putting mind to type thing ;)
June 2nd, 2007 at 12:08 pm
I didn’t see LFG yesterday. Glad you made some money.
I’ve only had two orders that I thought were executed poorly in the last 18 months. In both cases a quick call to my local Scottrade branch cleared it up (they credited my account for the difference between the price I got and the price I should have gotten). That’s one reason I have been so loyal. In the first five minutes, the trade reporting is slow, but the trade execution has always been just fine for me, so far.