Profit Hunting

On paper last week was fairly decent.

Leadership seems to be in tech/entertainment stocks and financials.  Nobody is interested in companies that make things anymore.

Couple of charts to have a look at;

XOM breakout, expansion on high volume

XOM breakout, expansion on high volume

XOM looking good on a high volume breakout over double-top resistance.  Expansion days on the breakout were consecutive at >1.5ATR which is strong.

Looking for 3-5 days of narrow-range consolidation on lighter volume for entry signal here.  Alternatively, a more longer term move back to $50 for entry, which would provide a better risk reward ratio with stop placement at $49.25

This chart above is almost identical to the MGA chart I posted in March last year.  Here’s what eventually happened there:

MGA post breakout bull-flag behaviour

MGA post breakout bull-flag behaviour

These trades are good setups – the hard part is being able to manage the downside risk and time the entry.

Stop placement when trading flag consolidation over a period of 2-3 weeks can be tricky, so you’d be looking for an exact entry signal on an intra-day basis here.

Falling knife

AMD falling knife

Posting this for any long term value traders out there.

Risk reward is immense right now, but this is ticking down at all time-lows (>20 years) for the third time in 7 years.  The downside risk is about 15 cents, but I couldn’t really sugest a long here.

I’d be more interested in shorting the first retest of the breakdown of Fridays close.

WPX daily, breaking down

WPX daily, breaking down

An actionable short, similar to the setup in AMD but in WPX right now.

This is breaking a good base a key level ($10), forced by some extremely high participation.

A short on a move back to 10 offers an extremely attractive and low risk trade – if you can get it.

However, judging by the intra-day chart of MPX, this ship may have already sailed.  Short-term ascending wedge back in to the breakdown area.  Great trade if you can catch them, but this stock would have had to have been on your radar before it was near $10.

Has WPX already given the best risk/reward short?

Has WPX already given the best risk/reward short?

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