Setups

I managed to find some decent charts for next week tonight as the market begins to give swing traders some actionable setups for the first time in a fortnight.  I’ll be re-implementing my watch-list rotation next week, so I’ll be ignoring all technical posts from the past fortnight with the exception of KSU STJ and JBL.  I haven’t been rotating my watch-list over the past fortnight or so as I’ve been opting for a huge ticker list scrawled across a notepad on my desk for reference.  An organized watch-list is an organized trader.

Charts aside, this weekend has thrown up some good ideas for articles that I’m looking to write over the coming days.  I’ve been putting off writing educational content over the last month because I’m planning to launch a traders’ education site in the next few months so I’ve been saving the content for a dedicated portal.  However, a colleagues bad stop placement got me thinking on ideas for articles on the risk management element in technical analysis.

Thinkorswims latest update, which includes market profile capabilities has also got me tinkering with automated trading for day trading the indices again, so I’m planning an article series which outlines how to design and code a black box.  It’s something I find really interesting and long-term it’s something I want to get into full-time.  As is the theme with my trading and this site, no trading system I write will use any oscillators, indicators or price theory BS.

Let’s hunt some profits then;

RAS flag, enter on second wave

I ran another scan on low-cap low-price stocks to see if there was anything interesting out with the usual landscape (volume filter was still strict).  Here’s RAS which I like on continued accumulation after this consolidation phase ends.  Two entries; on volume break out of short-term range with risk at 3.25 and 5 target OR long on retest of 3 with risk at 2.8 with the same target.  Watch volume and candles for entry signals.  I prefer the entry at 3.

Volume picking up ahead of potential breakout on PVR

Watching PVR for expansion out of current range to new highs.  Volume has been increasing in the lead up to this next test of 29 overhead.  Looking to go long over 29.25 with risk at 28.75 with targets at 31.5 offering 5:1 on the upside.  The resistance range has been pretty tight in terms of wicking so this is a good candidate on a breakout/close above these levels.  Not plan to short this.

Yeah you know this

I have a soft spot for huge expansion bars on massive accumulation, followed by 3-5 days of tight and thin consolidation and here is another example.  Moves over 11.35 will confirm this for me on price but look for volume to match.  Risk can be placed on the other side of the consolidation range at 10.90 (rather than below the at-high wicks) because of the narrow element to the continuation.  Upside to 13 offering over 3.5:1.  The ratio doesn’t sound spectacular but the probability of the follow through given the recent volume is very high.

CTXS flagging over resistance

Great setup here as CTXS consolidates above resistance after some nice expansion.  Breaks above 74 will confirm the breakout, but I strongly favour the scaling-in option here with limits to buy set in the 71.80-72 region.  There is a good chance the price will test these levels before climbing (or falling) and the stop placement level is the same for any entry (71.25) so buying here gives you a better handle on the risk.  Upside to 79 here if this catches another wave of accumulation.  Dump it quick and at your stop level if this looks like failing, as there is a lot of fresh air below 71.

CNQ breakout after cup and handle

Nice clean technicals on a trend-established stock means this is one of my favorites for the week.  A recent cup and handle breakout has continued the momentum here and this will soon offer a trade on a pullback to 46.  Buying in the 45.90-46.25 area with risk at 45.60, this has upside to 50 offering a trade ranging from 5.5-12.5:1.  The prior resistance at 46 was also pretty clean-cut and CNQ doesn’t have a recent history of wild wicking so I’m comfortable with having a tighter stop here.  Buying the retest of the lateral and trend support line would be a picture perfect entry, so long as this pulls back on thin volume.

Nice volume in the breakout, due a rest after 3 days

A great break to new highs on TLM on strong volume and good expansion means that this too will offer a trade soon.  Naturally, the pullback to prior resistance as new support at 23.65 would be a great entry – but look here for 3-5 days consolidation on thin volume.  TLM has a recent history of nice reversal candlesticks, so watch for a doji or morning star formation on the pullback to signal a potential reversal to the upside.  With risk at 23.40, the upside targets are set conservatively at 26.  However, given the nice trending of this stock and recent lateral support, I would be inclined to let this run until it forms a lower high before closing the position.  Probably my second favourite trade of the week.

Bearish action on EXM, wedging into double overhead

A lack of short sentiment this week, with just this offering to the downside.  A descending triangle failure on high volume made EXM shift 20% in a week.  Since then, the stock has recovered on declining volume in an ascending wedge (bearish) formation.  Fridays candle is signaling a little bit of indecision here and when combined with trend and lateral overhead in close proximity, there is a strong chance this will continue to the downside.  Looking to enter anywhere between 5.30-5.45 with initial risk set at 5.60, my first downside target is lateral at 4.50 before measured moved at 3.50.  The risk reward here is slim, which is then reflected in a reduced position size.

Ideally, the stock will see another day or two of thin accumulation up into the high 5.30s or .40s before dumping off.  I have visions of EXM gapping down 10% over the next few sessions though, which would make the trade invalid given my trading rules for managing risk.

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