Thursday, February 21, 2008

Unfortunate Japanese Candlestick Formations

I have to make this quick. First of all, my inflated shares traded today was a result of me bumping up my share positions in a number of trades. It's not like a placed more trades, I just placed bigger trades.

I started the day off well with a stock off my watchlist. I wanted to see CMI clear 2-day resistance at $53.13. It opened at $53.15 and I picked it up after it ran and consolidated a little, near $53.50. I caught almost the whole move with 500 shares, selling most over $54.50.

I gave a little back later in the day, when the chart formed an unfortunate (and unfortunately common) candlestick pattern the Japanese call the "ass rape." As you know, I'm reading a book on candlestick charting right now. The problem with this formation is that you don't know it's an actual "ass-rape" until after the fact.

My big loser today was GG. The reason why it was such a big loser for me was because it held such promise as a trade, and I sized in, with 1500 shares. Here, I'll let the chart explain...

It sucked, but I'd do it again. Why? Well, first of all, $40 was a breakout point on the daily graph. Also, GG reported earnings last night and was showing relative strength versus the other gold stocks and the market. The reason why I lost more than I'm accustomed to in the trade is because I had more shares than I'm accustomed to. I sold 500 at $39.86, 500 at $39.80 and 500 at $39.70. So on average, I lost a little under 20 cents on my shares. Not a disaster. Still, I lost $350 all told in the stock.

I also managed to have a few other losers over $200. MON, KMT and the piece of shit known as SWC. In fact, we see the "ass rape" pattern again (this time in reverse) in SWC in the late afternoon.

I was short 2000 shares of SWC going into that "ass-raping." While I had the strength to hold onto half, I let go of 1000 near the high of the move, at $18.40, because I suck like that.

Anyway, gotta go. Will be back later to discuss the Obama/Hillary debate with an "open thread" if all works out.

Here's the stats:
P&L, -$546
Best, CMI, $390
Worst, GG, -$351

45,800 shares traded.
18 stocks traded. 9 winners, 9 losers.


wincity said...

First break-out is prone to retracement, especially one without much consolidation. GG trades with gold mostly and gold is extended, IMO. The producers often don't respond to gold price when it's extended.

Bluedog said...

I hate those "ass rape" candles! LMAO!! Good one!! Technicals are always easier seen in hindsight.