Have you ever noticed how sometimes a stock seems to have some artificial barrier keeping it from falling through a certain price? Here’s two examples from today, in Genentech (NYSE: DNA):

… and Biogen Idec Inc (Nasdaq: BIIB):

(both 30-min charts)

In DNA’s case, I even remarked to Dave Mabe over IM that someone seemed to be holding it up at 80.50. Those wicked upper wicks on the candles made it impossible for me to go long. But, the Ultimate Trader would not have been so cautious, and gone with the pattern he’s seen again and again in the markets: when someone is holding a stock up, and the markets turn in their favor, usually the opposition just gives up. So, today, when the markets went positive, so did DNA.

You may recall from the scalp on BIIB I posted today that I went short the only time BIIB fell through 49.00 by more than a couple cents. After a bit, I should have noticed how strong this support was, and gone long the stock. But, because I was focused on some other things in the early afternoon, I missed my chance. The Ultimate Trader ignores email until the markets close…

Maybe this pattern happens on the short side, as well, but I haven’t really noticed that as much. I think it’s harder for this pattern to emerge with resistance, than it is with support.

Stocks Mentioned In This Article
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DNA	| |
BIIB	| |

A played a dip below 49 on Biogen Idec Inc (Nasdaq: BIIB). As you can see, I got out at the bottom of the move, which is very satisfying. :-)

(1-minute chart)

Unfortunately, because of the uptick rule, I only got filled for 1/3 of the shares I wanted. Oh well. I was on the fence about whether to try to make a full trade out of this play. I know biotech in general is very choppy and tricky. With only a partial fill, I decided it should definitely be a scalp, and I hopped back out at first sign of reversal. Commissions are a larger drag on profits when I trade 1/3 size, and 1/3 total profits are just not worth the stress of staying in a trade that’s not dropping like a stone. Just my opinion.

This trade was scary at first, because my platform froze right after I clicked the “sell short” button. I didn’t know if I was filled, or not, or what the price was doing for 20 seconds or so. When the connection re-established, I was partially filled, and the price was close to my exit, already.

Stocks Mentioned In This Article
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BIIB	| |