What a Strong Stock Looks Like

DE was a strong stock this AM.  I blog this point besides DE being at its 52 week high.  And save that DE was up over 2 1/2 points.   There was a telling movement on the open from 51.50 to 51 which foreshadowed a new intraday high to visit.  Let’s discuss.

SPY 111.50 is an important intraday level.  We failed miserably there this open at around 111.42.  The downmove was ugly to 110.60.  During this downmove in the market I watched the bids get hit in DE.  I suspected that DE would find lower ground since the market became so weak as SPY tanked.  But there was significant buying on the bid at 51.45, when 51.50 was DE’s high.  And then 40c bought before FINALLY dropping.  And then 35c repeated this buy pattern.  And then 30c.  And then 25c.   Then 20c, and 15c, and the whole.

Yes DE traded lower but it showed noteworthy relative strength into the SPY dip.  So when SPY stabilized I started a longer term intraday position in DE near 51.  Fast forward and DE found 52.25.  Some on our desk got shaken out into this downmove.   Maybe one day these traders will become as good as me 🙂 (just kidding).

I use this technique, calculating the strength of the stock by watching the bid buying into a downmove, to determine which stocks to enter longer term intraday postions.  DE Buy 51 was an excellent intraday trading opportunity.

Best of luck with your trading! Don’t forget to follow us on Twiiter!

DE 11-18-09

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