Making an Appointment

As I have discussed numerous times on this blog planning is one of if not the most important thing in trading.  You must plan out what you are going to do in every single scenario, so as to not hesitate if and when a trading opportunity presents itself.  Sometimes these plans take a little more time to develop so you must set alerts and be ready at all times like today in Hewlett-Packard (HPQ). 

HPQ has been weak on the charts ever since their CEO got himself in a little bit of trouble and resigned.  This downmove has been met with a lot of volume as funds have been liquidating their positions based on the uncertainty this company now faces.  On Tuesday I was looking to get involved in this stock if it continued to show weakness on the tape.  The levels we were watching were 42.40, 42.30, and 41.94.  I got short a few times on Tuesday anticipating a break only to watch the stock basically trade flat save for the last 5 minutes of the day. 

This last 5 minutes of the day was so important because it basically told the story of what to expect coming into today.  We traded through the first two levels I was watching like they were nothing and with increased volume.  Also we closed below these levels so I had a good idea that HPQ would be in play today on the open.  If you weren’t paying much attention to HPQ on the close Tuesday you probably weren’t ready for it today.  We opened down today and basically broke the flash crash lows of 41.94 in the first 10 minutes and trended lower for the entire day. 

This was a very simple trade as long as you were ready for it today.  The setup is one that everybody can understand.  A stock sells off, consolidates, then makes another leg down.  The key was to not get frustrated the previous day and keep this stock on your radar.  Put your alerts in at the price you need to see the stock trade at, then when it breaks get involved.  Have a good night and best of luck tomorrow. 

Kyle