![\"SEED](\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/12\/SEED-dec-1st-symmetrical-triangle.png\" "\\"SEED")
<\/p>\n","protected":false},"excerpt":{"rendered":"I highlighted SEED today during our Stocks In Play meeting.\u00a0 I mentioned a few levels that I thought would be important and how I would trade it from a bigger picture perspective.\u00a0 I talked about how AMZN traded yesterday and the level I viewed as the best possible entry for a long trade.\u00a0 I then discussed AIG and highlighted some key levels.<\/p>\n
The discussion of the above three stocks was a starting point for our traders.\u00a0 The second part of the equation involved them going back to their seats and mentally preparing for the trading day.\u00a0 They had to decide where to best focus their attention on the Open and spend time visualizing a multitude of potential trading scenarios.\u00a0 The final piece of the puzzle, and the most difficult for some, was spending time observing the stocks trade throughout the day.\u00a0 By closely watching a stock trade a trader is able to gauge the strength or weakness of the stock from the tape and also identify basic technical setups that lead to easy trades.<\/p>\n
Yesterday,\u00a0 AIG was one of the weakest stocks in the market.\u00a0 Today, it gapped up in the pre-market on some news items.\u00a0 I was looking for a short right on the Open based on the magnitude of the selling I saw yesterday.\u00a0 But I was also mentally prepared to trade it from the long side as well.\u00a0 After a quick down move on the Open it was clear that AIG was starting to be accumulated.\u00a0 Watching the tape allowed me to change my initial bias from short to long.\u00a0 I was then able to capture over two points of upside with very minor pullbacks along the way.<\/p>\n
I was not watching the tape in SEED as closely as AIG.\u00a0 But I was reviewing its chart every 10 to 15 minutes.\u00a0 I noticed a very unusual down move in the late morning from 14.40 to 14.\u00a0 The “wide range bar” that I observed put me on alert that SEED might be setting up as a good potential short.\u00a0 Over the next three hours a “symmetrical triangle”, a classical chart pattern, was developing.\u00a0 When SEED dropped below the uptrend line of the pattern it became an intraday short.\u00a0 My initial bias in SEED this morning was on the long side but I was mentally prepared to change my bias if the tape or a bearish technical pattern developed.\u00a0 Unfortunately our clearing firm could not locate any shares of SEED so I couldn’t take advantage of a good shorting opportunity.\u00a0 But by observing the pattern and replaying in my mind exactly how I would have traded it I am now more prepared to execute on a similar opportunity in the future.<\/p>\n
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