Trader MD

Oil, which has been one of the strongest trades and strongest markets over the last several months has recently pulled back pretty sharply. There was no news to suggest that this pullback was due to some major psychology shift in the market. As a result I was waiting for oil to setup as a bounce play in the highlighted yellow area.

I'm not one to pick bottoms, but IMO this was a very low risk setup based on the strength we had seen in crude, the fairly rapid (yet losing momentum) decline we had seen).

Ended up making a fairly nice profit, which probably would have been better if the oil market wasn't as volatile.

2 Charts show the setup on the daily and the trade on the intraday basis.





Here's RBN from when I entered it as it was breaking back above resistance. RBN was a stock I had been stalking as it had held up better than most other equity charts during the month of July. It initially broke out past resistance but ended up pulling back with the market.

(*edit*: oops, posted the wrong RBN chart - from a few weeks back ... it's now corrected).



Here's the trade on an intraday basis.



Here's RIMM which ended up forming a symmetrical triangle of sorts. I probably exited a bit early, but looking back and thanks to the nondirectional market, my exit was actually fairly good. My target initially was a run up to the 50 day moving average (~126), but it had already run half that distance (from 119) in a very short period of time so I decided to take profits.

Posted by Trader M.D. at 8:28 PM 0 comments

Labels: Divergence, Oil, RBN, RIMM, Triangle

Here's DUG, which I had been looking to get into for the last few days.

I entered right after this mornings post on energy breaking down soon. Here's a screen shot from when I entered.

Take a few moments and look at it upon the time of entry.



Here's the annotated version after the close.



I think DUG can easily hit 29 or 30. The XLE still hasn't closed below the 50 day moving average and the DIG (the inverse of dug), has a bit more downside. Also, just as important, the $VIX hasn't really hit capitulation levels.

As I mentioned the other day, energy will be the last sector to really capitulate since its the strongest, and it's only began to break down.

All that being said, I'll be prepared to re-evaluate that line of thought on a daily basis and let the charts tell me what to do.

(I still have my entire position of DUG.)

I'll be happy to answer any questions, as this isn't exactly the most straight forward setup. Hopefully that wasn't too confusing.

Posted by Trader M.D. at 6:05 PM 0 comments

Labels: Channel, Divergence, DUG