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<font
size=3 face=Arial>This is a
short-term pullback play. I use MS to scan for stocks in strong <span
class=SpellE>uptrends w/good relative strength. I then visually scan
these charts to find those coming out of strong bases that meet <font
face=Arial>Wyckoff<font
face=Arial> criteria and I refine it further by
looking for cross-verification thru a convergence of different elements of
support and resistance - trendline, <span
class=GramE>ma's, Fibs, ect.
<font
size=3 face=Arial>
<font
size=3 face=Arial>In Sept and
Oct last year TSG reaches a Selling Climax (SC) after a sustained sharp
downtrend. This is followed by an Automatic Reaction (AR). According to <font
face=Arial>Wyckoff<font
face=Arial>, the SC and AR define the <font
face=Arial>Trading<font
face=Arial> <font
face=Arial>Range<font
face=Arial> (horizontal yellow lines).
<font
size=3 face=Arial>
<font
size=3 face=Arial>After
attempting and failing to breakout of the range 12/02 price forms a descending
triangle. On 3/10 there is a shakeout (SO) at the bottom of the range. Note the
relatively strong volume and the close in the upper half of the bar and back
into the range here. A nice reversal bar.
<font
size=3 face=Arial>
<font
size=3 face=Arial>In late Mar
and early Apr price consolidates around the flattening and converging 20d and
50d ema's and sits at the apex of the narrowing
triangle as volatility winds down. 4/21 a huge breakaway gap on strong volume
above the downtrend line and both the ema's, as the
20d crosses above the 50d.
<font
size=3 face=Arial>
<font
size=3 face=Arial>In early May
price hits resistance at the top of the range and the now flat 200d <span
class=SpellE>ema, where it consolidates. Note the low <span
class=SpellE>vol and how price hugs both these converging major
resistance points, refusing to go down. 5/13 a strong
breakout above both on a wide spread and huge volume. RS <span
class=SpellE>vs S&P is very positive here.
<font
size=3 face=Arial>
<font
size=3 face=Arial>Now I'm
looking to enter on a pullback if it's positive. On 5/14 the reaction begins on
strong down vol, but the bar is narrow and does not
retrace even half of that previous massive breakout bar. 5/15 is a very narrow
spread on low vol and little price loss. 5/19 a wide
spread on relatively strong vol, which suggests
weakness, but then look what happens, there is no follow-thru: 5/21 a wide
spread closing on the high on strong down vol, the
body of the candle closing smack dab on the flat 200d ema
and the rising 20d ema, a Dragonfly <span
class=SpellE>Doji. That's real purty, <span
class=SpellE>imo. This convergence appears to be very positive sign for
a reversal bar and a resumption of the rally.
<font
size=3 face=Arial>
<font
size=3 face=Arial>So I set a
buy stop just above the top of this bar at 21.77 w/a protective stop just below
the low at 20.77. My profit objective is just under the previous high at 23.73
so I'm looking at about a 2:1 reward:risk
ratio. I trail my stops each day to the day's lows. Because vol
on the rally is unimpressive I scale out half my position after I've made 1 pt
at 22.77, then close out the rest of the position on 5/29 when my objective is
hit.
<font
size=3 face=Arial>
<font
size=3 face=Arial>Yes, it's a
small gain but I'm a swing trader, that's what I do. Believe me, these little
buggers add up. As always, money management and risk control are essential to
the strategy. Safety first, profits second.
<font
size=3 face=Arial>
<font
size=3 face=Arial>Harold <font
size=2 face=Arial>
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