Momentum Trader Report: 05/28/08

The Bounce Continues

The market rallied early on a better than expected durable goods report, which was dampened by a mid day rally in oil. But the market resumed its move up after the oil market closed, with each index making a modest gain. There was nothing modest about many of the momentum stocks, many of which made huge moves today.

All three stocks from the Watchlist triggered today. Lets look at them.

WDC blasted through the entry point early. It actually gapped up a few cents, but was buyable. It made its big move in the first 30 minutes or so, then bounce around for the rest of the day.

Although starting slowly, WLL rallied in the afternoon, passing both entry points listed in the Watchlist.

SQM was moving nicely today, and then rallied strongly through the buy point late in the day.

FLS was pick that triggered yesterday. I was planning in day trading this one, but it rallied strongly yesterday afternoon. I mentioned it could go higher today. It did just that, closing once again near the high of the day.

This was a day trade I didn’t make money on yesterday, but could have had I held it.

A Pristine Momentum Setup

Here’s a stock I plan to keep my eyes on tomorrow. I call it the “Pristine Setup” because it’s a setup discussed in the Pristine Momentum Trading DVD. It works like this: Look for a stock in an uptrend with the 20-Day SMA and 40-Day SMA in parallel, like railroad tracks. This shows strength in the stock. When the stock pulls back to the 20-Day SMA and bounces, buy it as it trades above the previous high. In the case of HP, the entry would be 60.47.

I’ve never used or tested the Pristine setup, but will be curious to see how this one acts.

Trade Ideas for 05/29/08:

I’m not going to be able to watch the market for most of the day tomorrow, so it’s doubtful I will take any new positions. I did find two charts I like, if the market were to continue this bounce. They could also be forming double top patterns, so volume would be key. I will likely not trade these, unless I am able to see them breakout.

Good luck and good trading!