Learning to Day Trade - Part 8

Multiday Breakouts

This is an ideal pattern and why you should always look at multiple time frames. I didn’t and I missed the entire trade.

The initial runup was caused by this news:

Biotechs and 5c tick stocks have been hot for the past few weeks so that always helps.

During the first two days it wasn’t really worth trading unless you were able to dip buy and scalp within a few minutes. It was kind of choppy and closed near its lows then the next day it had a small spike and consolidated the entire day (closed as a doji candle on the daily chart). It’s also a 5c tick stock which certainly added to some of this choppiness.

$ALDX daily candles courtesy of finviz.com

$ALDX daily candles

Take a look at the volume on the previous two charts. It’s way above average compared to any previous spikes. This is what you want to look for when buying a breakout.

$ALDX 4 hour candles

$ALDX 1 minute candles

On this chart you’d want to get in as it broke over that $7.30 resistance level from a few days ago. If you missed the $7.30 breakout you could have waited for it to re-test that level which it ended up doing. Try to get in around $7.40 and risk it breaking down through the $7.30 breakout level.

I marked $8.20 as possible resistance from several months ago that it may have trouble with. In this case it just kept on going like it didn’t even matter. The volume for that level barely even registers compared to the last few days. The more volume a stock has when looking for a resistance level the more important it becomes due to increased buying hence more bag holders. If the $11.00ish range fails, there will probably be a ton of new bag holders and that level will matter in the future.

This one was a slow all day grind, so if you were extremely patient and waited all day you could have sold into the close at $11.00 for a $3.60/share gain (that’s $360 on a 100 share/$740 position).

Today, 09/15/17, it’s gapping down $1.30+ off its highs so it may end up tanking since it’s starting to get overextended and people are panicking. The higher it goes the better the short it will be. It is a Friday so it could end up squeezing - trade the price action.

Update:
It had a morning spike then dropped from $10.55 to $9.30. Rebounded later up to $11.90 and had a hard crack. Multiple opportunities on it long and short.

Update again:
They had an offering on 09/18/17 after hours. This is why you don’t hold stocks like this for long.


Part 9 - Bear Flags



Disclaimer

I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.