Make this losing trade (YUM)
Feb 8th, 2012 | By Bella | Category: Mike Bellafiore's (Bella's) Blogs
Yesterday in YUM I made One Good Trade which was One Losing Trading. On the open YUM settled in a battle 64.80 by 65. Young Leo called out the fight and I took notice. Also YUM was In Play showing premarket strength and gapping up. YUM broke above the opening range battle and shot up to 65.70. This was a very nice move to all time highs. I was interested in buying the pullback.
YUM pulled back and found a buyer at 65.50. I bought more. An explosive upmove and then a shallow pullback matched with a buyer on the tape is one of my favorite intraday patterns. I set a stop at 65.38. I was stopped out of the lot I bought at 65.50. I set my stop for below 65.25 for the rest. YUM pulled back to 65.30 where there was some strength on the tape. I bought some more with my line in the sand of below 65.25. This is where YUM would show a clear intraday reversal for my trading time frame. I got stopped out.
This is a pullback trade. It didn’t work. After such a trade I review the trade for some characteristics that made this set up less likely to work. One characteristic was the lack of a battle from above 65 to 65.70. There were no short losers to squeeze along the way. When a stock breaks cleanly from a battle level intraday and finds all-time highs I am interested in buying a pullback. One mental note to make for the future is the subset of a lack of battle and YUM skipping prices.
Another characteristic to note is the pullback was a bit bigger than most patterns that trend cleanly. Generally YUM holds that 65.50 if it is going to trend cleanly for the day. Once we started heading towards a bigger pullback our chances of catching a clean trending stock diminish.
Overall I would not make changes to my trades. In the future I will just be careful not to get too big with this subset of a pullback trade. I will also be sure to be bigger on a shallow pullback as this is the subpattern that works best for my trading style.
Bella
no relevant positions
