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HANS - or why I find trading so challenging

 
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mjlewis



Joined: 10 Jan 2006
Posts: 42

PostPosted: Thu Sep 14, 2006 12:05 pm    Post subject: HANS - or why I find trading so challenging Reply with quote

So, I've been educating myself for about a year on candlesticks, technical analysis, etc. I've definitely got a lot to learn still, and make silly mistakes all too often, but boy, it really gets me when I see a good signal and don't take it, and the stock just takes off.

So, case in point for today - HANS stockcharts.com/h-sc/ui?s=hans

First scan picked it up 7-8 days ago after a set of consecutive dojs/hammers/small bodies all around the same level. Stock could be building a base, I thought, but volume was low, and there was no obvious support line I could see.

Next 2 days - doji and then a gap down with a hammer-like signal. Well, I thought, it broke the base, if there was one, so no go yet.

9/12 - nice strong candle, small gap up, but I saw a resistance zone around 30-30.50, and I wasn't sure if the risk/reward was good on this any longer, given how high it climbed on the 12th. Volume was also a little light. STO was very OS though, and SAR flipped from a sell to a buy signal.

9/13 - another good day, but a little bit longer upper wick and it didn't break above that resistance area. Still light volume.
9/14 (today) - huge gap up with very strong volume

So now, I'm stuck. Do I think it can break through 34 (the high from the candle on the big gap down a couple weeks ago), and work its way up to close the gap all the way up at 40, or is the risk/reward now way out of bounds on this one?

Anyway, just needed to vent since it came up on scans for over a week for me on successive scans, and I didn't take any of the signals, and now I'm watching the stock up almost 20% in 3 days.x


Last edited by mjlewis on Thu Sep 14, 2006 2:06 pm; edited 1 time in total
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drunnels



Joined: 09 Feb 2006
Posts: 23

PostPosted: Thu Sep 14, 2006 12:52 pm    Post subject: Hans Reply with quote

I feel your pain. We all do because we've all done it too.
I pulled up a daily chart of HANS and put a piece of paper over the right side and did some analysis.
Lower volume in a consolidation seems right to me. A nice divergence I found was in MACD, positive for about a month before the breakout.
The lower wick on Sept 11 pierced the bottom Bollinger Band. Sept 12 didn't show much volume, but it was a bullish engulfing with stochs and RSI oversold which engulfed 7 bars. If that didn't convince you, then the next day it gapped up, never traded lower than the close on Sept 12, and on the 30-minute chart the first two bars showed very good volume. As I recall, the Nas was pretty flat opening on both those days.
It has come up through the 200 today and will cross the 50 before it fills in the gap. Will the gap fill in? Who knows? If you think it will, it's got another 6 bucks to the upside.
I might have been excited about it on the 12th, but I'm not now. I don't chase 'em, but then I've missed a lot of these too.
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mjlewis



Joined: 10 Jan 2006
Posts: 42

PostPosted: Thu Sep 14, 2006 2:56 pm    Post subject: Reply with quote

Thanks for the feedback, drunnels. I find myself always looking for some good volume (or at least average volume) in a consolidation pattern, especially so close to that huge gap down. That's definitely a misinterpretation of the candlestick pattern that I need to overcome. I see a hammer or a doji (or a string of small hammers, dojis, or small bodies), and want to see good volume to feel confident that it has a good probability of marking a turning point.
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drunnels



Joined: 09 Feb 2006
Posts: 23

PostPosted: Thu Sep 14, 2006 3:26 pm    Post subject: volatility Reply with quote

I don't think Steve cares too much about volume. He's into the candle signal. That said, there are many ways to skin a cat. Some interesting, or possibly not too interesting, observations regarding the volatility of HANS to date --

While this pattern doesn't match a Bollinger Band Squeeze, it does nevertheless have one of the requirements, a 6-month low bandwidth.
In addition, the Average True Range has dropped from $2.50-3.00 to less than $1.50 on the day before the breakout, near its 6-month low.
Volume has receded for the period since the gap down. All 3 point to low volatility.

Low volatility begets high volatility. Bollinger is quick to point out we still don't know which direction the price will move once higher volatility kicks in. But on HANS we know the answer. Note the higher volume today too once EVERYBODY knows about it.

On Sept 12, Steve would say: That's a bullish engulfing with stochastics in the oversold area. The more candles it takes out, the stronger it is.
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