we received the following email from a Radar subscriber today (post originally written january 9th):

Subject: SMB Radar play in ACOM today

Question:
Dear Bella,
I am trying to develop certain plays based on the SMB Radar that I call SMB Radar Strong and SMB Radar Weak. My thoughts are that I’ll check the names on the strong and weak today lists and then look for appropriate entries with good risk/reward parameters. I do this after the opening drive (around 10-10:15 am)

Today, ACOM was at the top of the weak today list. Unfortunately, I missed the trade and actually tweeted that on stock twits. My thought at the time was that a bear flag was developing on the 5 min chart at 10:10 am. Even though I missed that, I know I would have been hesitant pulling the trigger given the large move down earlier and short term support at 27.45 and 27.31. Also missed the break out short at 26.83 in the pm session.

My question is simply to ask if you guys use the SMB Radar in that fashion, and if so, how would you have traded ACOM today?

Thanks for your time. SMB Radar is a great tool that I’m trying to use to the fullest. Every day I realize how vital it is to my trading success.

Greg

Spencer’s answer:

We definitely use the Radar to scan for good setups in the strongest and weakest stocks that are In Play. If you check the right hand column on the blog under “SMB Radar” you will find multiple posts discussing the “Spencer Special”. These are stocks that have had an Opening Drive and then have a tight horizontal consolidation before a continuation of their trend. This is my favorite intraday setup right now and I even worked with a programmer to grey box it recently.

As for your question on ACOM. Your assessment was right that it was developing a Bear Flag. To be more precise the consolidation was a descending triangle with well defined support. Your initial entry from the chart would be when it breaches support at 27.65 with a stop above the most recent “lower high” at 27.78 on the 5 minute chart.

Once you were in the trade there was no reason based on technicals to get flat before the close. It made a couple of feeble attempts at bouncing at the 27 level but by 1:15 had started to hold below with a tight consolidation around 27.90 offering a chance to add to the position. This trade definitely took awhile to develop so it would have tried most traders’ patience but a failure to have two consecutive up moves on the 5 minute was enough to keep you in the trade until 4PM or a possible swing.

As for you concern about the short term levels you mentioned I wouldn’t let those keep you from entering a trade that is In Play on the Radar and #1 on the Radar Weak list. Those stocks tend to follow through. Just pay attention to the level to see if there is unusual support and if so exit the position.

Steven Spencer is the co-founder of SMB Capital and SMB Training and has traded professionally for over 15 years. For a 14 Day Trial to the SMB Radar click Here.

No relevant positions

As traders it is our job to trade what we see. But as humans we may have difficulty being objective evaluating the amount of opportunity the market is offering intra-day. Perhaps you read headlines talking about how “quiet” the market is or that the level of volatility is so low it is too difficult to make money. That information may serve as a distraction to the very good trades that present themselves each day.

One of my favorite things about the SMB Radar is that it tells us in a clear visual way how much opportunity is available to me. If at the end of the day the Radar In Play list is filled with red and the top names on the strong/weak lists are red as well then I know there was money to be made.

There is always a bull market somewhere and there is always a bear market somewhere. Its the job of a professional trader to be there every single day.  Don’t be handicapped by focusing on the lack of volume or movement in the indexes (which the Radar highlights as well). Find where the big money is flowing in or out and take advantage of the clear setups that are presented.

Making trades in QCOR, COG, or PHH today didn’t require a lot of grey matter. It made as much sense as avoiding the SPY, QQQ, and IWM all of which did nothing.

Steven Spencer is the co-founder of SMB Capital and SMB Training and has traded professionally for over 15 years. His email is sspencer@smbcap.com.

No relevant positions

This is a time to be cautious as a short term trader. Volume is light and there is not much In Play. The SMB Radar is our insurance policy during slow market times to make sure we focus our energy on the stocks with the best risk/reward setups. When I look at the Radar during the day and most of the stocks in the Strong, Weak and Price Spike columns are in blue, I know it is time to be hyper selective in my trades. We color code stocks based on their In Play rank and anything below a 1.0 is a shade of blue.

The stocks on top of the Strong and Weak columns on the Radar presented some nice technical setups. However AMGN which was #2 on the Strong column wasn’t even In Play and probably was a trade I would have either passed on our taken very little risk. Here are the top 2 from Strong and Weak today with a few annotations.

Steven Spencer is the co-founder of SMB Capital and SMB Training and has traded professionally for over 15 years. His email is sspencer@smbcap.com

Click here for a 14 day trial of the live Radar we use on our floor.

*no relevant positions

Earlier today, around 10:15am EST, we posted a snap shot of the Strong and Weak Today lists on the SMB Radar. These are just 2 of 10 outputs that the algo gives us, but are extremely powerful for intraday swings. We saw MCHP on the top of the Weak Today list. It was also holding below 34.00 support, with room to run to its next daily support at 33.10.

This could have been traded in a few different ways (and was on our desk).

1. If you were playing the tape (due to how In Play it was, indicated by the bright red highlight on the Radar), there was an entry when MCHP got tight around 34.00 and finally moved away. However this is an uncomfortable place for many to initiate a position.

2. The other trade was closer to a Spencer Special – wait for it to consolidate lower.

Ultimately, it stayed on the top of the Weak Today list for the rest of the day and reached its 33.10 target. This is a set up we look for everyday when using the Radar. If you are a new user, make sure to review these trades and your own, everyday. Learn the set ups and continue to look for more. The market is constantly speaking to us by repeating patterns. Our job is to find them and execute. The Radar just helps us do it more efficiently. See my post from yesterday on a trade I executed poorly while using the Radar. You can see a clear difference between the set ups.

Click here for a 14 day trial of the live Radar we use on our floor.

Disclosure: No position in MCHP

My play today in FE was to short against 43.80 for a move to 43.00, then ultimately 42.30 if it held lower and really worked. Here is my review.

What was working in my favor:

- Hard down move on the open on volume

- Very In Play on the Radar

- Top 5 Weak Today name for most of the day

- Clear level to trade off of and define my risk

- Conservative target was more than 5:1 reward to risk ratio

- FE was relatively weak compared to the market

What was working against me:

- FE was holding above vwap

- 43.00 was a long term support level with more support areas below

- 43.55 did a lot of buying and it was holding above

What I did right:

- I chose to take on the trade and find a good risk/reward area. I thought as close to 80c as possible would work. I shorted 80c.

- I covered my risk at vwap / in front of the previous buyer

- I gave up on the short above 82c

What I did wrong:

- I didn’t follow my plan for what to do when it got below vwap. Instead of waiting for it to hold below the 55c buyer, I added to my position when it got below vwap. Then, I didn’t really think through where I would put a stop for that add. I ended up with too much risk. I got stopped above 80c for everything. I have no problem taking that stop. Based on what was going against me (from above) – this was not a very high probability play, however the loss should have been 2c, not 22c. I let a low risk play turn high risk.

Remember, having tools like the Radar can be very helpful. But it won’t do all of the work. The trader needs to 1. understand the set up / play / context 2. control risk.

As we have mentioned in the past, Price Spike readings below 7.00 are usually not anything to be very excited about. Above 7.00 catches our interest (also the level an audio alert kicks in on the SMB Radar). Readings below 7.00 could always develop into more – but are not yet ready to play momentum.

This screen shot was taken today as $IDCC and $WFT were both at the top of the Price Spike list. $IDCC provided opportunity for skilled momentum traders, $WFT was nothing more than an abnormally large order.

This is only one of ten outputs on the Radar, but is an example of how to improve and understand your tool a little more everyday.

Click here for a 14 day trial of the live Radar we use on our floor. If you’re a user, feel free to ask us questions on how to use it / set ups / more at smbradar@gmail.com.

-  @tarhini_smb, trader

Disclosure: No position in $IDCC, $WFT

Here is a quick snap-shot of the top stocks on the Today’s Range list on the SMB Radar. This is just one of 10 categories that the algo captures.

Click here for a 14 day trial of the live Radar we use on our floor.

@tarhini_smb

This is another play I want to remember. It’s basically a more advanced view of the Spencer Special. In this case it was selling short GPN after a big gap up. We do not simply fade stocks because they are “over bought”. There were a lot of checks in favor of the short (and not at the top by any means), which could be replicated and thus be a play we make again.

The first thing we noticed was GPN on the top of almost every column on the Radar. This is a huge sign that the stock will have opportunity. Specifically, it was top Down Trend, Weak Today, and was highly In Play.



Here is how we viewed the stock.

1. Immediately has an aggressive sell-off from the 44.40 long term resistance area.

2. Tries to rally off of the lows but the bids aren’t holding it higher. This is a big sign that a lot of people want out and that the demand for the stock – even after such a heavy pull in -is minimal.

3. 42.50 holds the bid for 20 minutes (you can see it in the 1min chart) . This is where we looked to make a play (also the same time of the Radar snap shot you see above). So we have a stock that is unusually In Play, Top Weak Today / Downtrend, and is setting us up with a catalyst to enter the trade. Get short when 50c drops. Note: Depending on your stop, you may have been stopped out on this trade once. But it didn’t go above the tick range high of 62c before really failing about a minute later. Big picture, the psychology going on here is that GPN failed to hold its gap up and did a lot of volume attempting to do so. This traps a lot of longs to fuel the downside.

4. Target is reached here (gap fill).

5. Consolidates at the low, another play can be made here but not an initial position.

Click here for a 14 day trial of the live Radar we use on our floor. If you’re a user, feel free to ask us questions on how to use it / set ups / more at smbradar@gmail.com

If not you can ask questions on this play below.

-  @tarhini_smb, trader

Disclosure: No position in GPN

Lately we have been posting some very simple Radar setups that can really step up your trading game. Simple, trend following plays that can be very high probability, good risk / reward plays. Today $OCR made a similar set up to the Spencer Special, however didn’t have as many checks as we would like to see. Consolidation wasn’t very clean, the market was holding higher, and it wasn’t in the top 5 on the Weak Today list. Still, it had a chance and could arguably have been worth a tier 1 trade that could still possibly work (depending on your stop).

Here is a snap shot of the Up and Down Trend Columns in the SMB Radar as of 10:55 EST. The job of these scanners is what you would expect, they find stocks that are trending intraday.

This takes care of a lot of the work we have to do as traders. From here you want to be sure the stock is also In Play (check the IPR by cross referencing or by color) and even better if the stock is on multiple columns such as Strong or Weak Today.

With the SMB Radar you can see the live feed of our proprietary algorithm that is constantly scanning the market for the stocks we look to trade. Other outputs include: Price Spike, In Play, Todays Range, Opening Range, Strong / Weak Today, Near Highs, Near Lows.

Check out our Radar live with a 14 day trial to use it in real time.

Questions? Comments? Leave them below or ask us at SMBradar@gmail.com