Sunday, January 2, 2011

four strategies for 2011

1. 20 day MA bowl:  This is an entry as the 20 day MA carves out a bowl pattern, often in a value play.  The bowl represents a basing/accumulation period that will lead to a long swing or a quick stop as the 20 day MA is broken.  These require a lot of patience.

2. Trendline entry.  When a clear trendline develops (3 touches), buy on the trendline, especially if volume is light.  Looking for candlestick confirmation.  Exit is top of the channel -- since chances are this stock is not ready to break out.  Trendline is often not connected with moving averages, usually below them).

3. Breakout of trendline. Simply entering on a breakout.  Must occur with HIGH VOLUME.  Good for daytrades.  Stock should have news/catalyst and/or be in strong sector.  Works best with high institutional participation. These stocks can and often will be 'expensive'.  Ignore valuation. Price action only.

 4. Intraday / short term swing 3 bump pattern.  Often a strong stock having a bad day - or taken down by shorts.  The entry will occur after 2 higher lows have formed.  Entry on the 3rd swing -- hopefully the 3rd higher low.  Stops will usually be no more than .20 from entry.  Position size can be large for daytrade, smaller if holding overnight.  Works best if pattern forms near previous support area.  

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