Today was very unusual for me. Yesterday, Zoomie and I were talking about the apparently very successful PinoyTrader. It looks like a lot of his daytrades key off chart patterns on intraday charts, but which cross days (like, if you saw a cup and handle across 10 days of 30-minute charts, etc). I haven’t done a lot of trading with that kind of cue, so I thought I’d try it out. I thought, maybe this will be the kind of trade that I can feel good about buying at the open.

So, last night, I went through multiday 60-minute charts of a lot of stocks from my watchlists. I made a list of 5 or 6 stocks that, to me, said “I am going higher tomorrow.” I picked a stop and a target, and wrote myself an email about it.

This morning, I woke up, and pulled up L1 Quotes and order forms for 5 stocks, and waited for the open. It was information overload (I’m not used to trying to watch 5 stocks for an entry at the same time), but only 2 of the stocks went in my direction right at the open… they were SIRF and NDN. I thought, great, these will be my two trades.

Then, I was reminded of everything I don’t like about buying the open. In particular, these stand out to me:

• You don’t know yet whether your stock has a lot of volume, really.
• You don’t know yet, if the market has any kind of trend, or whether it is with you or not
• You get sloppier fills

SIRF

So, let’s look at SIRF Technology Holdings Inc (Nasdaq: SIRF):

I wanted in at 29.70. I got in at 29.75. My initial stop was 29.39. The stock dropped in a slow, straight line to 29.40 before turning around. Whew! That was really close. Then I made a mistake, perhaps. It clawed its way up to my 1R point (30.11). My preference when that happens is to move my stop to b/e. But, as a sign of little faith in the stock (which was doing well below average volume, I might add), I decided to do just a little more than that. Instead of moving my stop to 29.75 (or 29.77 if I wanted to cover commissions), I moved it to 29.84. Well, it dropped to 29.80, which stopped me out for 0.22 R. Had I used my normal b/e stop, I would have exited the trade at EOD for a little more than 1 R. That’s what I get for second-guessing my stock, I guess! I think, given the low volume, I really should have just taken my 1R when I got it in the first place. Let the high-volume stocks run, is maybe the better policy.

NDN

Well, if SIRF did mediocre volume, then 99-cents Only Stores (NYSE: NDN) was in a freaking coma. It finished the day at around 44% of its average volume, but only because of a surge at the end of the day. Let’s look at it:

I wanted in at 15.00, and got in at 15.08. Not great, but, it was running up, which is what I wanted it to do. Correction: what I wanted it to continue to do. Well, it fell to just under 15 a little while after my entry, and pretty much stayed there all day. My initial stop was at 14.85, so I was never close to being stopped out. This trade was one big yawn, but there were two good signs at mid day:

1. the red paintbar indicating that it might soon have an 8/20 EMA crossing, followed by a green bar. This meant that the crossing did not happen. As I mentioned in my post on MA crossing prediction, thwarted crossings often run the other way
2. the stock was showing signs of consolidation, followed by positive momentum (as seen in the lower paintbars… gray means consolidation, and green means upward momentum coming out of consolidation)

These two signs told me I was going to hold til the close, and then make a decision about whether to get out, or make a bet that Monday would open even higher. I decided b/e at the EOD was good enough for me, though the daily charts still look like it’s gonna go higher, to me.

So, if you follow my trades at all, you know this was one heck of an unusual day. But, I made money (though not much) in a choppy day. I will keep looking at trades like these that I can try, so I can perhaps get in on the opening action in a safe way, from now on.

Stocks Mentioned In This Article
Stock	Links
SIRF	| |
NDN	| |

Eh… this one was gonna be so sweet. I nailed the entry on a great drop (at least 2.25 R even with the way I jump out of trades too early all the time). But, I got a terrible fill on my entry, and I made a rash decision to jump back out. I should have just covered enough shares to restore my stop to a decent place. Mistake! Thus categorized as a mistake on my blog. I know better than this!

The stock was SiRF Technology Holdings Inc. (Nasdaq: SIRF). Chart (click to enlarge):

My fill had an average basis a full 10 cents below the last print when I entered the short order. I hate that uptick rule! You might think, “10 cents? That’s nothing.” On an $80 stock, I agree. On a $20 stock when my risk was only 20 cents in the first place, I thought it was a big deal. Had I used a limit order I wouldn’t have been filled at all…

So, I missed a nice gain, but I will at least give myself credit for not staying in the trade with a stop I didn’t want. Of course it’s always nicer to make 4 digits rather than 40 bucks….

Stocks Mentioned In This Article
Stock	Links
SIRF	| |