Another Good Trade - Another Good Lesson

Philip took a good trade on MRX yesterday - one which I would have taken in an instant - and he held it correctly to the R1 point and then took his profits. Excellent trade, brilliant execution. Something all of us can do every day if we have the patience to wait for the set-up and don't try to force it.



Let me go over this with you - a classic BOB set-up coupled with a crossover - coupled with, as we already know, a market turn and reversal (see previous post) and you must have the highest confidence in this trade. While I don't recommend it you can almost take it without a stop-loss (although one placed right below the tail of the previous red candle would be appropriate).

As far as I'm concerned Philip did the right thing by taking profits at R1 and I would have as well but there is another indicator on this chart that we sometimes overlook.

Take a look at the DEI chart, the trade from the previous post - this time with annotation -



Frequently, not always but almost always a top is accompanied by a volume spike (1). This is followed by a lower volume (2) and then an exit candle (3).

If you look at MRX you will see that the first contact with R1 resulted in a return to 4 and then a launch off of that into the 1 - 2 - 3 exit scenario described above.

But it takes real courage not to book profits and a lot of practice to wait for that kind of exit.

Missing The Boat

I better get over whatever this is that is fuzzing up my head - miserable spring colds are the absolute worst - here is what I missed already today

IMCL - From the breakout filter


AFFX - Ditto


MRX - A gap-up return to 4 bounce off pivot point


Meanwhile my two touts of the morning WEN and ALTH are both making like bombs and dropping.

NSM my overnight trade also gapped up this morning but only 6 cents worth - then it dropped back to the pivot where I doubled up and now it is flying. I love BOB (in a purely heterosexual kind of way - of course).

MVL did a reverse crossover (red candle over EMA 21 - 4) and I dumped it immediately. I'm still holding MPW even though it is flat right now - GGB and STD (I still think that is the worst handle a stock could have) are both up on the day. KNOT is down again but is currently showing an RSI(2) < 2 so I'll probably add. I still think this afternoon will be up after the Fed announcement.