With the bearish sentiment in the market and the overbought condition of FDX, I thought it would be a good time to exit this trade with close to $1000 profit on it and await for a reentry point. The Doji (as Fortitude has pointed out) can be an exit signal that is worth not ignoring. We have had two doji's in the last 3 sessions, and today we have an inverted hanging man, also bearish.
PRC's and CRC's work well when the stocks go sideways, but as we have seen with AMLN, profits DO go down. Long-term, they hold up well, so you have the option to take profits when you are sure of the change in trend (at least temporarily). A long-term trader would do fine without all the changes in the account, as long as he/she updates the stop-loss orders routinely.
4 comments:
Juan,
For FDX, there is a Doji in the rise up, I will grant you and it has hit a resistance level at $88.8, previously seen on the 22nd June 2005. However, on ADX it isn't showing as over bought yet, so I am holding my position.
DNA, good day to enter. I got in yesterday on almost the low of the day, but if I had waited for today I would have done much better. I think this one is upwards to be honest.
RRGB, the spread on the Put Ratio Calendar Spread I can see quoted on IB is very wide.
AMLN,
AMLN is currently at $33.54 as I type this message. This is the 61.8% Fibonacci retracement from the high of $39.17 on the 4th October 2005, and the low of $30.08 on the 23rd September 2005. ADX has turned down too. Will it retrace upward from here? This is either an entry or exit point for this trade IMHO.
There is a lesson to be learned about trades like RRGB. The wide spread can make a huge dent on your profits. Looking for more liquid stocks is a consideration.
As you could see in my most recent article, my contingency order on AMLN is at $33.25. Today's low has been $33.36. Close! but no cigar....
Juan,
RRGB. I agree.
What about DNA though? With your Elliotician software, is the price projection of $105 obtainable or are you projecting something else?
It would be interesting to know.
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