$RIMM in Play

Coming into today Research in Motion(RIMM) was on my radar.  Some news had come out in the pre-market about the pricing of its tablet computer.  The news basically said that the tablet would be priced below $500 which would make it a cheaper alternative to the iPad.  The pre-market wasn’t showing much in the way of price action but I had RIMM on my watch list to see how it would react to this news. 

Immediately on the open RIMM showed some strength, basically trending higher for a $1.50.  The first level I was watching as potential resistance was 56.60 which was the highs from 11/08.  We broke this level in the first 15 minutes but this was where your skills as a trader must come in.  First of all the stock had just run for over a point so odds are pullback or sideways consolidation was to be expected.  Second the open in this market lately has been a chop zone with a lot of volatile sideways action.  For about 2 months now, in our morning meetings at Keystone, we have talked about the better opportunities presenting themselves after the open around 10-10:30am. 

After the open I knew I wanted to get involved in RIMM.  The market was showing weakness especially in the tech sector and RIMM was staying relatively strong.  It was only a matter of waiting for RIMM to consolidate and finding a good area to manage risk.  I entered during the hour-long consolidation pattern and added on to the trade when it broke the high of 56.81. 

As you can see for the rest of the day it was just a matter of how much you made on this trade.  Personally I missed about .70 in middle of this trade because I covered the entire position around the resistance at 58.00 instead of holding a piece.  I got back in on the next break out but left some money on the table.  Coming into tomorrow I am expecting RIMM to still be in play as this is usually a stock that trends for a few days after a news related break out.  The 200ma is at 59.50 but above that could see a trend into the 61-63 area.  Best of luck in your trading and have a great night. 

Kyle

Breakout Trade $RIMM $$

Day after day we as traders are in search of opportunity.  I have many conversations with traders who complain at the end of the day that this market is void of good trades.  They complain that there is only 30 minutes to an hours worth of good trading a day.  The problem these traders are having is that they are not in the right stocks.  The majority of our time should be spent looking for stocks that are going to move plus be readable. 

Today was a perfect example of being in the right stock.  The market as a whole was flat and basically trendless on the day.  Even though this was the case I ended the day thinking it was an easy day.  Why? Because I was in the right stock. 

On the open today there was one stock on my radar, Research in Motion (RIMM).  The previous day RIMM traded very well, with volume, and closed strong.  I was watching the stock trade in the pre-market and right around 915-920 RIMM started to show some strength on the tape.  My game plan was to get long around the previous days high.  This entry triggered at 933 and I got long.  This was the definition of a breakout trade as I was booking half of my trade for a point within 6 minutes.  The reason I booked is the market lately has been retracing opening moves only to resume them later on in the day.  The correct way to trade this breakout was to book some of the trade in order to manage risk.  RIMM ended up pulling back a bit but was still exhibiting strength on the tape so I added back in around the 53 level.  As you can see from the chart this was a good idea as I got another point out of the trade before exiting most of the trade during the consolidation of the move around 1030-11.  I reentered the trade when volume picked up at the 55 level and the bid held after the break.  I got a quick .90 on this trade before I recognized exhaustion coming and exited.  The tape started to get erratic and I knew this was the time to get out as something was changing about the way RIMM was trading. 

The key to this trade was that I was ready for it.  I had a game plan and the plan executed.  Many traders spend their time complaining about moves they missed or trades they mismanaged.  The reason for this is that they don’t have a good plan about what they are going to do.  Spend your time developing trade scenarios and spend the market hours executing your plan.  Best of luck in your trading. 

Kyle

Being Patient $$

As many of you know trading can be a very frustrating occupation.  The market gives itself many opportunities to try our patience with our ideas.  I know from experience that the most frustrating thing is ending your day knowing you had good ideas but you didn’t make what you were supposed too.  Solving this problem is one of the most important aspects of becoming a consistently profitable trader.  The first thing to look at is are you executing your ideas?  I have known problem executing my ideas so the thing I have been working on is the management of these ideas. 

As I went over my trades and ideas and talked to some veteran traders about what I was finding and came across a big flaw in my trading.  The flaw was that I was confusing my time frames and not letting some of the longer term ideas sufficient time to play out.  What I mean by confusing my time frames is that I was taking some trades based on the daily and hourly charts, but I was managing them on the lower time frames.  Basically I was asking the stock to move in my direction in the first 15 minutes I was in the trade.  This is the definition of forcing my will on the market. 

Now trading on the lower time frames is not a bad thing.  Many traders make a very good living by scalping and taking .15-.30 out of the market at will.  But this kind of trading is not what I am good at.  My best trades are trades that I have researched on the daily and hourly time frames.  The most important thing about these trades is that they make sense to me and this is where my conviction can come from. 

The problem I have been having with my trades is that I was exiting too soon.  The idea was still valid but I was exiting because of a quick move against me.  I realized that I need to have more patience with these higher time frame trades and also take more time in evaluating them during the day and the subsequent days to see if the idea remains valid.  Best of luck next week and happy trading. 

Kyle

Trading a Sector $LVS $MGM $WYNN $$

Over the past few months the market has been basically directionless.  This lack of direction from the markets has made trading with conviction a little difficult.  Trading day in day out has been more of a stocks pickers market and has forced us as traders to focus on a bigger list of stocks.  The reason for this is because of news, and or volume, specific sectors may be in play on a certain day.  When these specific sectors are in play you can’t miss out on the opportunity because opportunities to make big money in this market have been limited. 

Yesterday we had a perfect example of a sector that was in play for the day, it happened to be the gaming sector.  Las Vegas Sands (LVS) has been on my list for a while now.  It is a readable stock that generally has good volume.  It has been on my list as a long because it has been holding the previous breakout above 32.70 and doesn’t have any resistance till around 39.  My plan going into the day was to watch for strength on the open and get involved above 35.90. 

This plan changed a bit on the open because of the relative strength on the open from the gaming sector.  I got involved on the first pause around 35.70 so that I could build a position above the breakout level.  Because of the relative strength compared to the market my probabilities for the trade went up so it was my responsibility to allocate more capital  to the trade. 

I ended up holding this trade for most of the move and captured most of the move with full position size.  These have been the types of opportunities that this market has been providing.  Find where the money is flowing into or out of each day.  Good luck today in your trading. 

Kyle

Game Plan 9/8/2010

Just a quick post before the open today.  Commodity stocks were in play yesterday and look to be continuing with their strength on the open today.  I am specifically looking at US Steel (X), Freeport-McMoran (FCX) and Mosaic(MOS) today on the open.  All three are up in the pre-market and approaching important intraday breakout levels. 

X was very strong all day yesterday and is up about .50 in the pre-market and currently trading around 48.70 which happens to be yesterdays high.  If we clear that level the next resistance I see is the 200ma on the daily at 50.85 and then 51.40.  If we clear those levels 58 is the next reistance I see. 

FCX is currently trading around yesterdays high of 78.80 in the pre-market.  The level to watch is 79 which is basically the 2-day highs.  The next level to watch for resistance after that is 81.66 and then 82.20.  Longer term profit target above these levels is 88.30. 

MOS has basically been in a consolidation box for the past 15-days.  The levels to watch are 60 and 55.  Currently we are trading around 59 so I don’t think we are going to get to 60 today but I may put a piece on if I see some strength on the open with the intension of adding on above 60 for a profit target of 65.00. 

Best of luck today. 

Kyle