Friday, May 30, 2008

Today's Entry: APA

I bought 100 shares of APA at $133.34.

Setup: Trend Pullback. The stock has pulled back to the 50 day moving average, where it found support the last two times it reached this level. Stochastics are oversold and OBV remains stong.

Risk: My intial target is the recent high at $150. I would likely take partial profits, move my stop up to my buy price, and hold the rest into new highs. My stop is just under the 50 day moving average, which makes this a very low risk trade.

Concerns: While OBV remains strong, individual volume bars are all over the place. We have some stong bars, and some negative bars on high volume. It's also worth noting that this pullback came off a negative RSI divergence.

So why take this trade with these concerns? Stochastics have been good entries the last 7 times the stock has reached oversold levels. I am playing this stochastic trend.

2 comments:

ron said...

Hi
I like your technical setup on the trade, the risk to reward looks good.The only concern I see is the volume .It came down with 8m shares,and now its pushing up with half the volume.Do you consider volume in your analysis at all.Thanks

ron

The Market Speculator said...

Ron,
Regular readers know I pay attention to volume more than anything else. However, during holiday weeks I throw volume out the window.