Based on my candlestick chart analysis, and reinforced with some Western style technical analysis, I am suggesting the following 3 trades for Wednesday, December 26, 2007. Even though the market was open just until 2 pm on light volume, I think these show favorable patterns. I use a 1 month candlestick chart for my analysis.1) Echostar (DISH). DISH has been in a downtrend, from 43 on December 3, to its close on December 24 at 37.68, on a bullish piercing pattern. The downdraft gives fuel to this bullish sign. My plan is to buy at the market at 37.80 or higher if DISH trades there in the early morning. My target is price 44, its 200 day moving average, but I will sell at the next day market open if a negative daily candle (close price lower than open price) appears before then. If DISH goes above 44 with no negative candles, I will still hold. 2) United Rentals (URI). URI fell sharply, from a high of 34 in mid November, to a low of 18, because the deal with Cerberus fell through. The news that URI will seek a $100 million payout from Cerberus as a penalty for pulling out sent the stock into a bullish reversal (a bullish harami on the candlestick chart). This combination of a nearly 50% pullback with a reversal should send the stock higher, retracing much of the move. URI closed at 18.70 on December 24. I plan to buy at 18.90 or better if the stock reaches this price before 11 am, with a target price around 34, but sell on any negative rectangle at th...
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1 comments ↓
Senior Architect at Computer Merchants
A few words about my goals. I'm reporting on my actual trades (or non-trades). I want to see if I can develop a profitable trading method based Japanese candlestick patterns and other technical indicators. My rules (your mileage, as with all of this, may vary):
1) I buy and sell in fixed dollar amounts, all at once. I don't buy or sell a certain percent of my ultimate position size. It's all in or all out. That way, I'm not allowing the total amount invested to color my buy or sell decision.
2) I may not buy all of the possible trades I mention. I only will buy if the action meets my criteria. If not, there's always the next day.
3) I don't use options, short selling, or margin. If I like a stock, I am long. When I sell, I'm totally out.
4) I always set up a stop loss sell right after I buy to protect me from a horrible mistake.
Update on December 26, 2007 Trades
I bought United Rentals (URI) at $18.933 this morning because it traded above its previous close. URI closed at $19.05, up $0.35 (1.87%) today. My stop loss is $17.50, which I plan to increase, possibly to 18, depending on the opening action.
I did not buy DISH or FMCN because neither of them traded higher than their previous close.
Possible Trades for December 27, 2007
1) United Online (UNTD) generated a bullish kicker today. A bullish kicker needs two days activity and represnts a radical change of direction, usually on surprise news. In this case, UNTD changed direction because the FTC ruled that it will will end their investigation into its Classmates unit. UNTD closed at $12.20. I will buy if it sustains price of 12.25 or better. The chart suggests a- target price 17, around its trading range in early December, but I will sell before then if a bad chart event occurs.
2) BioAvail (BVF) generated a bullish harami today. It was up on news of settlement of $138 million class action lawsuit. BVF closed at $13.39. I will buy it if the price is sustained above 13.45. The chart suggests a target price 20, where it traded in early November.
3) CROX generated a bullish piercing pattern. The stock has been beaten down severely. It closed today at $40.38. It has been beaten down recently. I will buy if the price sustained above 40.50, with a target price of 50, its price in early December. Earlier it has traded as high as 80, so who knows if it can climb that particular mountain..