First you have to choose your daytrades from the stocks with the highest intraday ranges

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Alvin Hubbard
8 years ago
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1 Smash & Grab vs. The Swing Trade... We e Need Them Both th The Smash and Grab Trade - These are extremely wide range stocks that can give 5-15 points in one trading session First you have to choose your daytrades from the stocks with the highest intraday ranges so if you are satisfied with a one day hold you have at least 8% pocketed and possibly up to 20%. They should be repeaters and stocks that have historical price patterns that have been studied and charted for at least a 6 month time period. Also why would want to ride a winning trade when you have had a very large move in just one day. That is really the reason I wouldn t consider the new IPO s as more than 1 day wonders. There is no history neither fundamental nor technical to enable you to judge if the trade should be held over or closed. Entry for both the Swing Trade and Smash and Grab Trade is dependent on technical buy triggers: A bounce off 20 period MA, with confirmation from trending indicators (Directional Movement) and oscillators (Momentum, Stochastic, RSI) and volume indicators (McClellan Oscillator, OBV, MFI, etc) to make sure money is flowing into the company.. The Bollinger Bands is one of the best indications of Volatility Breakout as you can visually see the bottleneck caused by extreme volatility reduction.. The breakout is usually on higher volume as the volatility increases and stock makes increasing gains. The Swing Trade does not have quite with such a wide intraday range. It could be an earnings play AFTER earnings or well before earnngs come out. These are usually companies that are fundamentally sound, or are in the midst of a deal or transition that will catapult it into an unprecedented price acceleration. (i.e. PUMA, PLUG, SCII, ELNT, OCLI,ORTL, CORL).. Here are the trades that will let you accumulate wealth and a decision to hold over to the next trading session will be dependent on the technical position of the stock at end of the session. As long as the main uptrend remains intact and the stock is still within its trendlines, its okay to hold. But here you need more than a chart pattern. You should have a good idea of where the company is headed, the implications of pending deals, past earnings and/or revenue performance etc. If you re lucky you can latch onto a cheaper stock that is just being discovered and the upside potentials is enormous. We have to hold on to these winners and the way to do so is to relax the stops a bit. If you don t feel comfortable with a relaxed stop then establish a re-entry rule immediately if you see you have mistaken and bailed out too early. In fact, these stocks should be re-entered after all minor reversals. You have to be aware also that if you anticipated a reversal on day 1, and it doesn t page -1-

with the highest intraday ranges so if you are satisfied with a one day hold you have at least 8% pocketed and possibly up to 20%.

2 The following plays triggered buy signals, were on the watch lists and because of the quick attainment of price goals it was decided to close the trade as the upper trendline was penetrated. When a stock spikes you will have the reversal a day or two later. Usually very strong stocks can have one or even 2 disproportionate days that either spike up or down and seem to interrupt the pattern breakout you are anticipating. This is quite common as there are still some sellers holding back until they too are finally shaken out Page -2- Figure2. CHINA could probably have been picked up earlier on Friday, but the market showed extreme volatility after a too quick gain and reversal to the downside. Its best to wait out the 30 minutes, even if you occasionally miss a better entry to make sure the market is trending in the right direction. -

Usually very strong stocks can have one or even 2 disproportionate days that either spike up or down and seem to interrupt the pattern breakout you are anticipating.

3 Figure 3. WEBT is a very familiar play and since October it has been played as a daytrade simply because of the wide-intraday range making a large profit possible in a very short time period. Below is an example of another daytrade we made in WEBT on 10/20/99 Figure4. WEBT is one that is always watched for reversals. It was an earnings play that did very well. As a rule of thumb, IPO s that did well on their earnings report, usually suprising the street but less than anticipated losses, will continue to uptrend after retreats. The re-entry are not as predictable as they would be with earnings plays that have a actual earnings page -3-

very short time period. Below is an example of another daytrade we made in WEBT on 10/20/99 Figure4. WEBT is one that is always watched for reversals.

4 Figure 5: SMTF triggered a 20 day moving average breakout and turned out to be a good swing trade Figure 6: CBTSY This was a momentum play, and based on good NEWS. it triggered a buy signal and spiked up within 60 minutes. Because of the sharp upturn it was decided to close the trade and take the substantial profit. It was though to re-enter the trade near the close but it did not exhibit the breakout of consolidation that we anticipated. Page -4- -

Because of the sharp upturn it was decided to close the trade and take the substantial profit.

5 is usually an earnings play but can be a watch list play that has had some good news, a breakout after a long term uptrend and short term reversal etc. The direction the stock takes Figure 6. TIBX Here is an example of an excellent earnings play that triggered a buy signal the day the earnings calendar came out. The position was closed at the spike above the upper Bollinger bandand another trade triggered on December 7, that was held overnight because of the positive close and sold once again as TIBX penetrated the upper BB on a wide range bar. TIBX could have been just held from the 2nd, but it is a relatively new stock and we didn t expect the long-term rise. rtrtrtrt gfgfg Figure 1 COO. It was decided to hold COO over as long as the trend was intact. COO was a 2 time repeater earnings play, so we were familiar with its historical chart patterns around earnings season. The Swing Trade- page -5-

The position was closed at the spike above the upper Bollinger bandand another trade triggered on December 7, that was held overnight because of the positive close and sold once again as TIBX

6 Figure 2.PLUG This is the chart that put PLUG onto the watch list in the first place. In addition to the breakout, the upgrades PLUG got already anticipated that PLUG would be more than just a day trade Plug Power Inc. (a) PLUG Goldman Sachs» Market Outperform Plug Power Inc. (a) PLUG Hambrecht & Quist» Buy Plug Power Inc. (a) PLUG Merrill Lynch» NT Accum/LT Buy Page -6- -

more than just a day trade Plug Power Inc.

7 Figure 4. CIEN was a hold although we opted to sell and rebuy twice. Remember that CIEN was an earnings play and had to pass stringent technical and fundamental criteria to get on the earnings calendar. CIEN had a very good earnings expectations and the stock was showing early Anticipatory Upswing. A solid case for more than a daytrade Figure 5. SCII continuing to soar.. Stop did not trigger on December first, but had it triggered, SCII would have been reentered as it moved above the 20 period MA page -7-

calendar. CIEN had a very good earnings expectations and the stock was showing early Anticipatory Upswing.

8 Figure 6. BITS was sold on the break above the upper BB. Since I think BITS has the potential of an intermediate hold stock, a smaller position was bought after the stock moved above the 20 period MA near end of the session on Friday. Figure 7. IONN was also held for a number of days and will be rebought for possible intermediate trade. Page -8- -

was bought after the stock moved above the 20 period MA near end of the session on

9 Figure 8 ORCC was a hold for a few days and it was decided to keep a position for possible intermediate hold erer What we have done with these two varieties of plays is increase our potential for maximum profits. We use the very wide-range stocks for making money with daytrades. This is important in the current market environment where intraday gains are not as rare as they once were. It is also very important to have these stocks in our watch lists so we can expect an intraday spike, rather than wait for a story stock to get onto the most up list thereby being too late to enter a trade in a timely manner. We also have increased by twofold our profit potential by letting very exceptional stocks with lots of potential be traded as well. These stocks might or might not give wide intraday trading ranges, but are accumulative trades that can double in a matter of weeks. All we have to do is watch the trend and make sure there isn t a sharp reversal at the end of the trading session. If for any reason you decide to exit the trade, just re-enter it at the earliest moment. By holding both Swing Trades and Daytrades we have the best of both worlds. page -9-

It is also very important to have these stocks in our watch lists so we can expect an intraday spike, rather than wait for a story stock to get onto the most up list thereby being too late to enter a

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