Short Trade Idea
A trade set up that I
have used in the past is called a "Hole in the Wall". I like to look for these trades especially
after a major shock event day, like Tuesday.
I would note that both "Jack Damn" and I have mentioned this
trade idea in the past week, so I thought that I would elaborate and share
several charts with its features.
With the gap down on
Tuesday morning, we had several charts displaying the characteristics of this
trade set up. Here is a list that I
noticed on Tuesday evening. Please note
that not all these stocks display the full features of the trade set up (e.g.,
some are just experiencing shock events), but AKAM and TIE provide the best
snapshot pictures of a "hole in the wall of worry".
Here is an example
that I will probably trade … (click ticker for on-line chart)
AKAM
CTRP ** see example
ENZN
FMCN
FXI
ILF
JOYG
LVS
SNDK
TIE
VIT
WYNN
You can get a
description of the trade set up here …
http://www.hardrightedge.com/tour/gap.htm … and you can read in depth about
the trade set up in Alan Farley's book (Master Swing Trader). Here is what I generally do with these
trades:
1 – Make sure that
50% higher volume is present for the "hole" day.
2 – Make sure the
stock ends the "hole" day in weakness.
3 – Lay down fib
grids and look for retracement areas into the "hole" or gap.
4 – Compare these fib
lines with a new fib grid of the entire wall of worry.
5 – Select the ones I
like technically, enter the trade upon further signs of weakness.
6 – Set my stops
using #3.
7 – Set initial
targets using #4.
Leisa here: I took the liberty of creating a chart book for you using a 60-minute chart for FIC's picks above. You can find it here
I also created this list in FINVIZ for you. You can find it here.
