Wednesday, November 29, 2006

Breakdowns


I'm going to focus on one of the most easily identifiable patterns found daily throughout the stock universe. The Opening Range Breakdown. Another term I'm going to address is the Secondary Trendline. After confirming a breakdown, you also want to check if there is the break of the secondary trendline as annotated. Generally, when the Secondary, or steeper, trendline is violated, the odds greatly increase that the stock or index will continue to fall to the primary (flatter) trendline.I use my Scottrade Elite Platform to run Trade-Ideas Stock Scanner, and one of them is the opening range breakdown, with other minor requirements such as avg. daily volume 500k shares, price above $10, etc.

Today's Trades:

Advanced Auto Parts (AAP..not ipod)












Apple Computer (AAPL)











Another View of the Apple Trade:

4 comments:

Jamie said...

Nice work on the AAP. Those rounded tops are real killjoys for longs.

em said...

very interesting. Thanks for the tip - I'll keep my eye out. What about gap downs with an opening range 'breakup'?

em said...

I was just checking my scanner for these opening range breakdowns and found quite a bit on Wednesday. One that really stood out was LRCX. I liked how it dropped below the ORB... retraced back (with 34ema as resistance) and then printed that narrow range candle the 8th bar (:15 chart).
Do you find these setups often? I like them because they're pretty easy to spot. Thanks again.

D TradeIdeas said...

Great insight. I first got a good feeling for the opening range from a post on KirkReport which led to a strategy I designed in Trade-Ideas. It will be interesting to test your ideas about the secondary line as well. Thanks!