Classic Geometric Patterns and Narrow Range Setups

No trade for MSFT as the price opened down but well outside the pattern. Still.... we were prepared.

I would like to post the chart of one of easyguru's selections from Monday. Again, read his recent posts to discern his goals for this type of setup. In the Monday group, all have remained in their consolidation patterns except for NUE which broke out Monday and has continued to run.

Nice going easy'!
 

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Immediately disproving my admonishment about buying a break just below major MA's is CHIR. :)

Of the candidates listed for today, CHIR has been the only one to trade. Clearly it has worked out well so far. See chart.

Another of easy's selections from Monday has begun a move, NBL. It is worth looking at also.

Hey... the bottom line is... either you believe contraction leads to expansion and consolidation leads to break or you don't.
 

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5 out of 8 = losers. thats why i said what i said earlier.




Quote from inandlong:

An exciting day for the techies as a mid-day rally extends into the afternoon and pares losses considerably. Lol... sounds like a lead-in at your local fee-for-service website doesn't it? :)

But who cares about that because we can only spend our profits. Let's take a look at how yesterday's list from SP100 fared. One note though - clearly the Nas was more volatile today... imagine that... so the list of candidates from the Nas100 would produce some interesting results I suspect.

Let's presume that entry is straightforward at .10 above or below the previous day's high or low, respectively. Reversal occurs at the opposite extreme plus or minus .10 as appropriate. Also, for the utmost simplicity, let's presume that the trade was MOC and we actually received the closing tick.

A point here however.... a valuable axiom is "don't let a winner turn into a loser." In other words, some of these stocks had small gains all day until the late mid-day rally. If the price comes back, especially later in the day, get out at scratch. There will be a lot of new candidates tomorrow and the cost of doing biz these days is neglible, so get out. Also, if a stock has made a nice move intra-day and then stalls, use some basic and sound TA like a trendline to capture most of that profit.

This is how I break down the action:

Symbol, Entry, Max Profit Potential (MPP), Reversal, Close, P/L

BA, S 49.78, .03, x, 50.20, -.42
BC - no entry but look at the chart pattern!
CSCO, S 22.08, .14, x, 22.29, -.21
JNJ, S 54.68, .17, x, 54.89, -.21
PG, L 55.00, .02, x, 54.88, -.12
SLB, S 62.01, .20, x, 62.39, -.38
TEK, S 31.45, .79, x, 31.35, +.10
XRX, S 13.48, .01, x, 13.62, -.14

MOC resulted in -1.38 not including slippage and commissions, spread over 7 trades. That's almost -.20 per trade, which in my book isn't bad for a losing day.

HOWEVER... :) ... what if we got out at scratch on the losers? I watched these all day, and they all afforded ample opportunity to get out at scratch. But let's say we got out at scratch minus .07. Also, TEK afforded an excellent opportunity to take nearly the maximum profit for a long time today, but let's just say we exited with .50. Again, there was plenty of time to make these decisions, and as I said before, since we are in a ranging market during the summer, let's be conservative.

Now we have 6 losers at -.07 per loss for -.42. We had one winner for .50. Now the P/L stands at .08 not including slippage and commissions. That's still nothing to write home about, but it is better than -1.38 on a directionless day.

For the record not posted here, easyguru's sample selections produced some very nice opportunities. I don't know easy's complete methodology, and if I did I wouldn't talk about it without his permission. But I will post a hint: look at his stocks using the line chart function, and read his post previous to this one.

I'll get another list up for tomorrow. Also, for those who are reading these posts, keep in mind that the original authors intend for these trades to be multi-day, and not daytrades. Keeping track of the symbols can become burdensome, but if you are trying to learn the dynamics of this method it is well worth it. One more thing, once you have looked at these enough, it is very easy to "backtest" charts simply by looking at them. The NRID days will stand out.
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Nice board. I may start posting some of my thoughts and ideas on range contraction here and add to the information. I do lots of contraction work and teach people every day in how to use it in multiple time frames.

One of my favrorites is a 3 day pullback on the daily price bars and current price on the 60 min chart just traded above the preceeding NR7 hourly bar. So it is in a sense a "setup" off the daily time frame and the "trigger" is the 60 min chart NR7 b/o... Gets me in real early and I can find them on my real time scanner...

Oz

"TheStockStalker"
 
Hi Everyone,

I respect classic geometric patterns. However, may I suggest that you take a look at the attached.

Good luck with your trading..
:)
 

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Oswald that would be great! I love this setup and the twist you describe sounds sharp.

craftyfox that is some chart!!! :eek:

sunnyskies - yeah that day sure stunk. But I notice that you didn't mention anything about the lists posted for the 13th and 14th. Nor did you mention anything about the lists that easyguru posted. There were lots of winners, big and small. Hopefully you're not one of the many members who only point out the losing days and fail to recognize the winning ones, because ET has enough of those. Regardless, how you trade and how you post are up to you.
 
"I may start posting some of my thoughts and ideas on range contraction here and add to the information. I do lots of contraction work and teach people every day in how to use it in multiple time frames.

I encourage you to do that. Although I probably can't contribute a lot of savvy myself, I'm extremely interested in learning more about using different timeframes. Good information is hard to find!

BTW, what intraday scanning software do you use?
 
One of the things we are "examining" real time is how well this method does in a non-trending lower volatility market. Btw, 'this method' merely refers to trading consolidation breaks. The NR and NRID methods, geometric patterns, etc., are simply means used to help identify consolidation patterns.

The sorted list from the SP500 for today is only 10 symbols long. They are: AFL, AL, AGN, HPC, KR, SAFC, SVU, TEN, WAG, WMB.

Just like the braod market, there has not been much action today. Overall, it is not a bad day so far, but not great by any means. Some of the charts are showing a profit, some a small loss, but there are some interesting charts that I'd like to highlight.

These charts are clearly in consolidation: AL, KR, TEN. WMB is too, but it appears to be breaking out. Take a look at the symbols easyguru posted most recently also.

If nothing else, this exercise prepares you for times when there is more activity so that you have valid candidates to trade. Also don't forget that consolidation occurs at all time frames and can be scanned for using 5 minute charts or less as well.
 

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well inandlong. since you kind of accuse of doing a tally on a bad day... i suggest the following: lets do a tally on every day and that will give us an objective estimate of how well this method works. OK?
 
Quote from sunnyskies:

well inandlong. since you kind of accuse of doing a tally on a bad day... i suggest the following: lets do a tally on every day and that will give us an objective estimate of how well this method works. OK?
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Sure thing sunny'. Keeping a tally for the thread will be great so thanks for offering to do so. It will be a solid benefit undoubtedly.

Please post the entry and exit rules you will use; although, I recognize that not every trader will choose to exploit an opportunity in the same manner as you do. However, posting your rules will be invaluable as it will either show us a good way to enter and exit, or not a good way to enter and exit.

As a starting point - simply so you don't have to wait for Friday's trade - why don't you start with the candidates for Tues, Weds, and Thurs? That way we can learn from how you applied your rules.

But don't forget... it's not just about how well this method works. As I said earlier, it's about how well this method works in this market environment. And it's about identifying stocks that are consolidating and trading those stocks when they break.... a concept widely accepted and practiced at least since Edwards and Magee's first edition.

Thanks again for volunteering to undertake this task, sunny'. I'll post Friday's candidates from the SP500 after the open, but you have the last three days to work with.
 
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