Chart is at the bottom.
The price opened close enough to yesterday's close for the 200sma to be relevant right away and it did not fail to act as resistance along with the primary pivot point. I decided that this would be a good sorting day to start. The first few minutes resulted in the PP being tested and not broken. I am not positive if I would have entered a short at this point just because it was still early but the volume was low enough that I could have. Just the fact that the volume dropped off as the price climbed higher is a very good indication of a pending reversal.
The first trade tracked
On the bottom, $22.65, the price bounced so cleanly off of the S1 that, had I been in a short trade I would have exited within five cents of the bottom. Either way trade number two was cleanly setup right here as well. I would have considered this a no brainer entry with the 200sma as target one and the PP as target two. Given the way it tested the 200 three times I would have bailed at that point, $22.95ish.
The second trade tracked
$22.95 would have been my limit order entry for this next short trade and I expect I would have missed the initial entry so close after my exit... I would have seen it hit shortly thereafter and rode it down to the S1 area and bailed around $22.70.
The range
This day is trading between the S1 and 200sma so far which only has a little more than 30 cent spread, not a large target so entries and exits must be quick as 30 cents can dry up really quick. Small targets can be fun to trade but are not worth the effort when they start to get too small. This is one reason why trading a smaller stock can be good as the position size can compensate for the small moves and the cost of commissions.
The third trade tracked...eenie meenie minie moe....
My next trade was to be another short starting above the 200sma, $22.95 most likely, but the price did not show the signs of slowing down. Once it broke both the 200 and PP the entry may be for a long at $23.05, at least that would be the plan. It pulled back to just under this and I would have been filled at my price...or lower which is always nice to see.
Note that I am typing this as the maket progresses so it is a live blog in that sense, at this point the quotes are about 3:1 asks in the range which usually indicates a good time to close the trade as there is more selling pressure than buying BUT the price is not wavering much so I would stay in and see where it goes, R1 is near $23.30, the next target. I see the volume slumping as the price stops climbing so I would bail as the bids are at $23.25, my most likley close price.
Profit
Just to work out the profit on this one trade, entry and exit difference is 20 cents X 200 shares is $40 less $10 commission for a net gain of $30. Based on the value of the trade this is a 0.6% gain.
Watching for the next trade to be a short as the price hovers under the R1 except it looks like a good uptrend right now so I would wait for other signs before placing an order or I would check my gains and see if I even wanted to do any more trading.
Estimating the three trades (assume that I missed the first big drop and didn't get in on the large gain at 1000h) I would be seeing 65 cents per share x 200 shares = $130 less $30 commissions for a $100 gain...roughly 2% gain based on trade value.
Profit protection
This is the point where I would exercise a few of my rules. I have made my goal for the day, I should not let greed interfere with my decisions, do not try to place a trade and hope that the price does what I expect...or want it to do. So I resist the urge to apply more trades and just watch what the price actually does for a bit. It turns out to be uptrending after wavering below R1 then finally breaking through. Based on the quotes and the volume it looked like it might drop off but the indices I use looked like it would hold and gain. Not enough correlation to really make a confident trade anyway.
Interestingly it broke at $23.38 and dropped to $23.10. I was right but my timing was off a bit. I may have held it through the 8 cent gain (my short would have been targeted at $23.30 as an entry) and made some profit but I likely would not have. I didn't really watch close enough to see if I would have nailed the top on this one.
Now that the stockcharts have caught up with my trades (or not trades if you will) I have the chart to post. I only labelled the trades I did end up tracking (I cannot help it). So, following is the intraday minute chart for the first part of the day. Pivot points are blue green and red horizontal lines, the 200SMA is green.
This turns out to be a pretty classic trading day. Starting at the PP, dropping tot he S1 as clean as can be then rallying right up to the R1. The rest of the day can wallow around all it wants as this is the activity that I like to capture. I feel that the trading follows these pivot points prior to the lunch hour more closely than afterwards. I will try afternoon trading after getting some serious gains going in the morning first. I expect that PM trades will be slower progressing and VTSO will be more usable as a trading tool as a result.
Jeff.
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