Wednesday, June 09, 2010

Trading Talk

NFLX 114.7-115 was an old alert on our newsletter -- the type that we write does not expire (base versus for example a  trend-line move that has to be adjusted every day).   We posted the chart again, writing that we were looking for a breakout, near the open on stocktwits

As you can see it's a very clear trade from 114.7 to 119.5 (but as always take some day trade profits in the way, we're already out half and always moving stop up).

Why did we like the stock today for a break-out?  Great relative strength and volume.   As an added bonus, the set-up was excellent:

Stock opened up near the break-out zone and based.  Next came the dip to R1/20EMA -- one of our favorite combinations, before bouncing back for a great base and break right at the number for a very nice break-out (thus far already 3 points).   Entry was either on the reversal on 20EMA/R1 or on the break-out itself as volume poured in at 114.7 break.   Stop for the 20EMA reversal would have been a move back through the EMA, and if you bought the break-out then stop would have been a move back through the base (probably 114, so 70cents to 1 point risk).

  As we already posted you'd want to take some off on the move to 118 and move stop up above break-even but ultimate target is 119.5

Whether you're a day-trader or swing-trader do yourself a favor and plant the 20EMA on your 5 min charts.

Update:  we got stopped on the remainder on the move back through our entry point.   Back to cash, yet again!