The RSI buy – you get another shot today

A revisit of PCLN (Priceline Com Inc) today presents itself with another RSI buy opportunity off of the 5 minute chart. Here is what I see today:

As you can see in the chart above, the RSI fell down through 20 before attempting to bottom. A nice bounce up to the 468 level followed (where the shorts got to work again) as the RSI punched up through 60. The stock is currently hanging out at the 463 level.

This does not work cleanly every time (no trade setup does) but is a nice simple approach for those looking for such.

 

The Plan

Create a plan, follow it, then review it afterwards.

That is basically what I do. But what happens when the plan execution creates a trade that exceeds expectations and you need to adjust? How does one do this objectively while keeping emotions in check?

Won’t lie to you, no easy answer when you are in the middle of a trade. But certainly the “review it” part is a worthwhile task to perform. I find myself in that very spot right now on a GMCR (Green Mountain Coffee Roasters) short position that I have on. I had determined that I wanted to swing the trade but the tremendous down move has caused me to institute other trading rules that I follow (you know, don’t be a pig rule to name one).

How do you keep greed in check? Comments welcome.

 

Monitoring a trade

I am sure that each of you have your own system in place for how you manage an ongoing trade (long or short). For me, I typically use a 5 minute chart with a 3 day horizon – once I have entered the trade.

For an example of what I am watching in a trade, here is current chart on my screen of GS (Goldman Sachs Group Inc) in a 5 minute timeframe with the 20 Simple Moving Average applied:

You may notice the interesting volume pattern at the end of each day recently. Certainly worth noting (yellow TL drawn at the bottom). Although my trailing stop was tight and was taken out (good job Stop Hunters), I did manage to scale out several partials before the balance was hit.

Now bring on Thursday.

The RSI buy

One of the stocks that I am long (bull Risk Reversal) is DLTR (Dollar Tree Inc). Today it is basically flat (while the market is up over 2%) so I thought I would check in to see what the action is.

On the 5 minute chart below, you can see that it moved up early out of the gate, but has been under some selling pressure most of the day so far:

As noted by the Green circle, the RSI is nearing the 30 level – which is considered oversold. Look for a bounce here as buyers come in.

The OST twins

2 stocks that I am eyeing this week that are holding up well are COST (Costco Wholesale) and ROST (Ross Stores). Let’s take a look at COST first:

Flagging today after holding up rather well yesterday (a very rough RED day). Will continue to stalk for a hold here above the 83 level. Now a quick look at a Point and Figure chart:

As you can see above, the 83 level is the Triple Top B/O level test. A hold here is what I am watching for. Now on to ROST. Below a Daily chart shows a solid day being put in as it tries to overtake the 8d EMA: