RIMM Daytrade: 7/2/2007

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Research In Motion Limited (USA) (NASDAQ: RIMM) blew out their earnings last Thursday, and had a great day Friday, making a new all time high:

This morning, it ran up hard in the first 30 minutes or so, and then retraced to form a base near $209. That’s where I come in.

The Setup

This is the setup that caught my interest–a Jamie-style shallow retrace / base and break. I plotted fib retraces from the low of the day so far to the swing high at $212.80:

I liked the consolidation on lower volume, and the volume upticks as price approached the $210 resistance level. The retrace was shallow, less than 38%.

The Trigger

I went long when the $210 level was broken and was filled at $210.10, with my initial stop at about $209.30, back inside the base. My (aggressive) target was the 38% extension at $218, but I would watch for a high volume capitulation spike to exit, or if price stalled near the high of the day near $212.80.

The Trade

I managed the trade as annotated on this chart:

The advances came on above average volume, and the consolidations / retraces came on declining below average volume–just what I wanted to see. Stewie called out the flags on Wallstreak, and his mention early in the morning got me looking at the setup in the first place. Note: I did not blindly enter on his recommendation! That’s not what Wallstreak is for! I did take a look at RIMM to see if there was a setup there that I was interested in that fit my trading plan, and there was. That’s what Wallstreak is for. :)

I exited where I did because I was going to be away from my computer for an hour or so, and didn’t want to leave it open. After I was out, RIMM went on to print a capitulation-esque advance to $214.82, which you can watch later to see if I was correct in that call.

A good trade, and I’m happy with how I managed it, plus the R’s are nice too. Trade well, and the R’s will follow. Try to chase them and you’ll fall flat on your face. Trader-X (RIP) once told me to focus on one setup and just take high quality trades. I’m doing well with this one lately, and I’ll keep focusing on it in the near future.

Trade Summary:

RIMM Long
Entry: $210.10, Stop: $209.30, Target: $218
Exit: $213.44, P/L: 3.10R

Trade Grade:

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This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com