Quote from mlsignups:
My question is: I'm very comfortable w/ the intraday entry strategies of the dry up list. Is your entry criteria during the day (timing, volume, etc.) all the same as the dry up stocks or is the entry criteria different. If different I can take the time to look back at the other entries (no need to repeat); just wanted to know whether I needed to.
The best way for me to describe the entry criteria for Bruno R Stocks involves showing you a two day chart (30 min fractal) for NDAQ. See the attached chart. Notice on Day One, we see improved price right at the open (blue arrow), yet we see relatively low volume for NDAQ. The LBDU levels for NDAQ held at 310,00 shares yesterday, but NDAQ showed a price improvement of +.61 on only 60,000 shares (pink arrow 1). Notice also how NDAQ stays almost entirely within the intermediate term channels (green lines drawn in
Monday Night). On Day Two we see price improve significantly in the first candle (orange arrow), and we also see a significant difference in volume (pink arrow 2). Both days appear similar at the outset, so how did I know to stay out on Day One vs. Entering Long Day Two? If we look at the Stochastic Indicator for both initial candles on both days (red circles) we see a similar pattern here as well. Our answer, must reside elsewhere. If we look at MACD Histogram, we see Negative Levels on Day One, and Positive MACD on Day Two (Dark Green Circles). We also have higher volume levels on Day Two. We know from Jack's many posts that Volume always leads price, so when you see improved volume with improved price with a positive MACD and upward diverging Stochastics, you have an increased likelihood of entering into a profitable trade.
One might question, how did I know all this in real time? Simple. I had monitored NDAQ on Day One. I noticed a big price increase on low volume (again compared to LBDU levels) and decided Price could not sustain its run on such low volume levels. The market agreed with this assessment and price fell lower. Since NDAQ followed the trendlines so closely, I assumed Price would test the lower trendline at some point before preceding higher, so I set a limit order for 200 shares at the $39.50 price point. After receiving a fill, I monitored volume and price to insure the rate of both price and volume increase showed improvement over the previous day. Later The LBDU and Average Dry Up Volume levels simply became 'confirmation' levels that volume was progressing as anticipated. Normally, I would sell the shares when price breached the upper trendline, however, NDAQ gave the appearance that it wanted to break out beyond the trendline, so I decided I should hold for a while to see what the future would hold. By the end of Day Two actual volume had exceeded the previous day volume, and as price also had improved, Jack's Jokari window indicated I should expect the trend to continue. As a result, I still hold 200 shares.
The difficulty in attempting to 'catch the turn' with Bruno R set ups stems from not allowing enough room for price to move within the channel before jumping in. I had this problem with REDF last month. I simply entered into the trade a day early while price continued to fall. The next day (after I stopped out) price rocketed higher.
I recommend trading small share sizes with this method until you 'see' the ebb and flow of the individual stock's cycle. Keep your losses small (I use a stop offset - purple line), and be prepared to take a few losses minutes before price rockets higher until you get it just right. This method contains a bit more art than science to it, but hopefully, the above explanation provides some additional clarity.
Good Trading to you.
- Spydertrader
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