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How I made the decision to buy TERN on 6-28-05

 
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ChickenHawk



Joined: 24 Apr 2005
Posts: 247
Location: Houston, Texas

PostPosted: Wed Jun 29, 2005 6:28 pm    Post subject: How I made the decision to buy TERN on 6-28-05 Reply with quote

This is a summary of how I picked a stock on June 28th (Tuesday) about 1/2 hour after the market opened.

1. Did a scan the previous evening of stocks that had a morning star.

2. Choose the price range of stocks I was interested in.

3. Using an already made chart setup, I picked all the stocks that were oversold with stochastics at the bottom and with an indication of a slight turn to the upside. I ended up with two stocks, one of which was TERN.

Note: I only glanced at the volume and was looking for 200K average or better.



In a quick two minute analysis of the chart (remember that the 27th was all I could see at the time), I observed:

1. For May and June there were only two oversold conditions (below 20 on the Slow Sto). May 19-27 acted as support, Jun 1 - 14 was a second support area, and Jun 16-22 acted as a top resistance area.

2. Jun 19 showed a hammer with 6 bearish candles - remember on Jun 27 all I could see were the 6 bearish candles. However, the last 3 bear candles each gapped down while reducing the body sizes to the last one which was a doji/hammer.

I read the last doji as, the trading day range of Jun 27was from 2.9 to 3.1, with the smallest body. The low touched a "support area" from May 19-27, while the high touched the 50MA, which appeared to be a pretty strong support area for May.

Because of the last two bearish candles gapping down and reducing the body in size, and within the May support area, with the stows slightly turning upwards, I felt the candles and patterns may be an excellent opportunity to buy this stock in the early stages of a bullish run.

3. I thought the best place to buy would be the last gap around 3.05- 3.07 IF the DOW, Nasdaq, etc were bullish in the morning. I recalled Steve mentioning during the previous Thursday evening Stock Chat that the market may be down a few more days before going to the upside.

4. Because everything was looking good, on the following morning of Jun 28, the Dow was up, Nasdaq was up, TERN reached 3.06 and I executed a BUY.

For about an hour I watched as the 3.06 went to 2.98, up and down, up and down...it was making me dizzy, then I realized....I forgot to put a Stop and Limit and had to decide where do I want to sell for a nice profit?

5. The chart has two bearish gaps to fill, and a possible support area at the 3.40 range. I decided on a 10% return as a target 3.40-3.45 range, but also willing to sell to break even - IF THE CANDLES TOLD ME TO.

For a Stop point on May 28, I choose 2.90 - the low of the last Bearish candle.

I then did the best thing...I trusted the candles and left my computer...just peeking every few hours...

May 28th ended with a Bullish Engulfing Candle...was I happy!

Today is the end of the day for May 29th and the close was 3.14..I am even more thrilled...and changed my Stop to the low of the May 28 bullish engulfing candle expecting the trend to continue.

I am quite happy with the position as I have succeeded through two bullish candles, broke through the 50ma, have good indications of a continuing bull trend, and plenty of room to go for the Stochastics.

Wishing all of you a happy trading day tomorrow!

P.S. Hats off to Steve Bigelow.... he is right....."this is not rocket science...."
Very Happy
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wdbrooksiii



Joined: 25 Apr 2005
Posts: 11

PostPosted: Wed Jun 29, 2005 9:43 pm    Post subject: How I made the decision to buy TERN on 6-28-05 Reply with quote

Great play.

2 questions:

A. Should you wait for a confirmation on the 28th before buying into this position?

B. How did you insert the chart?
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Snake



Joined: 06 Apr 2005
Posts: 223

PostPosted: Wed Jun 29, 2005 11:32 pm    Post subject: Reply with quote

Chickenhawk,

Nice write up, thank you for that. I have a question for you though.

If you were only looking at the chart from the close on the 27th when you made your buy decision, how did you come up with TERN? It looks like it didn't make the morningstar pattern until the 28th, after you were in. Did you go in anticipating that it would form a morningstar?

Nice work on the trade. I hope it keeps running for you.
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ChickenHawk



Joined: 24 Apr 2005
Posts: 247
Location: Houston, Texas

PostPosted: Thu Jun 30, 2005 9:00 am    Post subject: Re: How I made the decision to buy TERN on 6-28-05 Reply with quote

wdbrooksiii wrote:
Great play.

2 questions:

A. Should you wait for a confirmation on the 28th before buying into this position?


B. How did you insert the chart?



A. With the stows appearing to turn from an oversold condition, I reasoned that the last three bearish candles each gapped down, each was reduced in size, and ending on a doji which was a 50/50 fight between the bears and bulls. The first two bearish candles the bears were strong, but the last doji indicated the bears were losing strength.

If the market opened bullish, then a "confirmation" signal might be a high open trying to fill the gap...this would allow me to catch a bull run in the early stages.

B. You cannot copy and paste a chart image. You must have your image file (image.jpg, image/bmp..) located on a file server that anyone can access. Usually this is on your domain (your website) in a file area (public_html) with your file (image.jpg)

When you are on your website and logged on as an Administrator, a common file location url would be:

http//mywebsite.com/public_html/images/image.jpg

to insert into a Candlestickforum post you would:

1 Press the "Img button" This will automatically insert brackets with the letters img

2 type your URL (note the difference from the one above):

http//mywebsite.com/images/image.jpg

3 Press the "Img button" again to place a closing brackets which include a slash and the letters img..anything between the opening img and closing img should be the URL of your image file
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ChickenHawk



Joined: 24 Apr 2005
Posts: 247
Location: Houston, Texas

PostPosted: Thu Jun 30, 2005 9:11 am    Post subject: Reply with quote

Snake wrote:
Chickenhawk,

Nice write up, thank you for that. I have a question for you though.

If you were only looking at the chart from the close on the 27th when you made your buy decision, how did you come up with TERN? It looks like it didn't make the morningstar pattern until the 28th, after you were in. Did you go in anticipating that it would form a morningstar?

Nice work on the trade. I hope it keeps running for you.


Thanks for your reply Very Happy

The scanning software I used picked up a "morningstar" pattern for TERN. I agree with you that it wasn't a morningstar pattern, and you are right that I anticipated that there was a good chance of ir forming a morningstar and going bullish.
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Snake



Joined: 06 Apr 2005
Posts: 223

PostPosted: Thu Jun 30, 2005 10:35 am    Post subject: Reply with quote

Another good source to use for hosting images is the following site, which you can post images to for free: http//www.imageshack.us/ (note, you need to add a colon, :, after the http in the link given).

Once you save your image onto your hard drive as a .jpg file, just go to the site given, click on browse, select your file and click host. A page with links on it will come up, select one of the links for a forum and then paste that link into a message.

The way I get the files into a .jpg format (which may or may not be the easiest) is to go to http//www.stockcharts.com and pull up the chart that I want. Then I press on my keyboard (ALT and then Print Screen, while holding alt). This captures the image. Then, I go into the Paint program that comes with Windows and paste paste the image. I then select just the portion of the image I want, copy it again, make a new file, paste it and save it as a .jpg file.

Good luck.
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Guest






PostPosted: Thu Jun 30, 2005 10:56 am    Post subject: Reply with quote

Snake wrote:
Another good source to use for hosting images is the following site, which you can post images to for free: http//www.imageshack.us/ (note, you need to add a colon, :, after the http in the link given).

Once you save your image onto your hard drive as a .jpg file, just go to the site given, click on browse, select your file and click host. A page with links on it will come up, select one of the links for a forum and then paste that link into a message.

The way I get the files into a .jpg format (which may or may not be the easiest) is to go to http//www.stockcharts.com and pull up the chart that I want. Then I press on my keyboard (ALT and then Print Screen, while holding alt). This captures the image. Then, I go into the Paint program that comes with Windows and paste paste the image. I then select just the portion of the image I want, copy it again, make a new file, paste it and save it as a .jpg file.

Good luck.


A shorter method is to pull up the chart, place the curson in the chart, right click the mouse and save picture, give a filename.bmp, then open paint, insert the bmp file and save as a jpeg

By doing this there is no cutting or cropping of the image, just file saving and renaming
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dtvaughan



Joined: 03 Apr 2005
Posts: 27

PostPosted: Tue Jul 05, 2005 6:26 am    Post subject: Reply with quote

good analysis.. Still $3.09 today with nice long tailed dragonfly doji 2 days ago, and smaller drogonfly on friday.. still looks like a "buy" today....I may get some!!!!!
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Snake



Joined: 06 Apr 2005
Posts: 223

PostPosted: Thu Jul 07, 2005 7:15 pm    Post subject: Reply with quote

Thanks for the quicker method of getting the picture to imageshack!!
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Snake



Joined: 06 Apr 2005
Posts: 223

PostPosted: Tue Sep 06, 2005 9:30 pm    Post subject: posting image instructions inside Reply with quote

bump
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Wed Sep 07, 2005 8:04 pm    Post subject: Reply with quote

Can I ask when you got out and why?
Since entry a lot has happened and it would be useful to see the management process also
Thanks
ABBO
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ChickenHawk



Joined: 24 Apr 2005
Posts: 247
Location: Houston, Texas

PostPosted: Fri Sep 09, 2005 5:26 pm    Post subject: Reply with quote

abbo wrote:
Can I ask when you got out and why?
Since entry a lot has happened and it would be useful to see the management process also
Thanks
ABBO


I have two pictures below which represent my thoughts between the buy date 6-28-05 and sold date 7-20-05.

See the previous post for why I purchased TERN.

In the first picture below, I have masked out a portion, so you can visualize what I saw at that time.

On Purchasing TERN on June 28 , I anticipated that the previous gap between June 23 and Jun 24 may be a stopping point, or it may perhaps go higher. or to the midpoint of the previous large bearish candle 3.40 to 3.45 range. It traded up through the 50MA the next day (Jun29th), then flattened out with the stochastics also flat, with a hammer on the 30th. I decided to use lower than the open of the 28th as my out - which it fell to, but then closed on the 30th up near the open of the 29th. I also was firm in waiting until the end of the day for the candle.

The 5th, 6th, 7th and 8th all opened above the 1/2 way bullish candle on the 28th and I was feeling better about the trade as no strong sell signal was given and the stochastics turned up.

The doji on the 12th concerned me, and another doji on the 14th made me very alert for a sell signal.

By the second doji I was above the Gap, and when the stochastics started down I began to watch the 50MA hoping for some consolidation and a bounce back up.




It bounced off the 50MA turning up, going about 1/2 way up the large bearish candle on Jun 23rd. The next day (Jul 21st) it opened near the close heading down and I sold with the thought that it would stay flat against the 50ma, had already reached my expectations of the Gap and midpoint of the large bearish candle, and that it was time to move on and look for something else. The stochastics were heading down and I thought it might consolidate and head down below the 50MA.




The spread was small, but the result was a small profit, and that's what it's all about.

The main point you should note is:

I did not use any fundamentals, or volume in the decisions. Only Candlesticks and common sense.

Hope this helps Very Happy
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Tue Sep 13, 2005 7:08 pm    Post subject: Reply with quote

Thanks chickenhawk. It is good to see the thinking behind the trade
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bomb



Joined: 24 Sep 2005
Posts: 47
Location: Shanghai China

PostPosted: Sun Sep 25, 2005 4:31 am    Post subject: nice Reply with quote

nice analysis and trade. We are waiting for more? Laughing
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