{"id":347,"date":"2009-02-02T18:08:31","date_gmt":"2009-02-02T23:08:31","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=347"},"modified":"2009-02-02T18:22:12","modified_gmt":"2009-02-02T23:22:12","slug":"fake-breakdown-rok","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/fake-breakdown-rok","title":{"rendered":"Fake Breakdown- ROK"},"content":{"rendered":"<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/02\/rok-02-02-09.bmp\" title=\"ROK 02-02-09\"><\/a>I traded ROK today.\u00a0 It was an excellent trading stock.\u00a0 And it&#8217;s still acting well.\u00a0 Tomorrow if ROK holds above 23, then I will get long.\u00a0 At 20.60 the bid would not drop.\u00a0 This was the catalyst for an explosive upmove.\u00a0 I was in this move.\u00a0 Chop!\u00a0 And later ROK would not trade below 22.80.\u00a0 And I started a long position around this price and caught a nice upmove.\u00a0 Chop!\u00a0 But later I got caught in a fake breakdown.\u00a0 Let&#8217;s discuss.<\/p>\n<p>ROK could not trade below 22.80.\u00a0 Previously ROK could not trade below 22.82. This 82c bid dropped but the 22.80 bid was held.\u00a0 ROK traded up towards 23.66.\u00a0 Then ROK traded back near 23.\u00a0 My alert went off.\u00a0 So I started to watch it again.\u00a0 ROK traded below 23 and I started to scale in.\u00a0 Below 22.80 was my exit price.\u00a0 I bought at 93c and 90c and 87c and 85c and 83c accumulating a nice position.\u00a0 The 22.80 dropped so I hit out of my long.<\/p>\n<p>22.80 was my level and ROK was below.\u00a0 We are traders.\u00a0 Trading is not as simple as stocks always go to support levels and then hold.\u00a0 We must have the trading skills to be able to trade other scenarios. \u00a0 We must develop trading skills so if that 22.80 support level drops then we can reestablish if ROK is still strong. We must develop trading skills so that if the drop below 22.80 is a fake breakdown then we can reestablish.<\/p>\n<p>ROK traded below 22.80.\u00a0 This was an important level.\u00a0 The market was weak.\u00a0 It was the midday.\u00a0 Last time the 82c bid dropped 80c held the bid.\u00a0 ROK was very strong today.\u00a0 These factors should make us skeptical that ROK would breakdown when the 22.80 level was violated.<\/p>\n<p>ROK traded below 22.80.\u00a0 ROK traded down to 22.70.\u00a0 There was a lot of volume done around 22.70.\u00a0 This is odd.\u00a0 After a stock violates an important support level it generally drops quickly.\u00a0 10c below the previous support is not an example of a stock dropping quickly.\u00a0 And then the buyers appeared to win at 70c.\u00a0 The 70c bid reappeared and held.\u00a0 This is another sign that the drop was a fake breakdown.\u00a0 So I got back in.<\/p>\n<p>On our charts ROK is a short below 22.80.\u00a0 But with our trading skills we can reestablish our long position.\u00a0 We cannot reestablish with as much size as we did scaling into the 22.80 level, but we can get some stock back.<\/p>\n<p>Trading is a skill.\u00a0 This was a difficult trade.\u00a0 I lost some when ROK dropped below it&#8217;s support level.\u00a0 But I reestablished and caught a nice move up towards 23.20.\u00a0 I did so because of my trading skills.<\/p>\n<p>Best of luck with your trading.<\/p>\n<p><strong>ROK NEWS from Briefing.com:<\/strong><br \/>\nCorrection: Rockwell Automation misses by $0.03; guides below consensus (20.45 -5.59) -Update : Reports Q1 (Dec) earnings of $0.81 per share, $0.03 worse than the First Call consensus of $0.84; revenues fell 10.7% year\/year to $1.19 bln vs the $1.26 bln consensus. Co issues downside guidance for FY09, sees EPS of $1.55-2.25 vs. $3.20 consensus; sees FY09 revs a revenue decline between 12-17%, which equates to roughly $4.73-5.01 bln vs. $5.3 bln consensus. (Briefing.com note: Earlier we said that guidance for EPS was $1.55-1.25, this was incorrect. We have deleted the original comment.)<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/02\/rok-02-02-09.bmp\" title=\"ROK 02-02-09\"><img decoding=\"async\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/02\/rok-02-02-09.bmp\" alt=\"ROK 02-02-09\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I traded ROK today.\u00a0 It was an excellent trading stock.\u00a0 And it&#8217;s still acting well.\u00a0 Tomorrow if ROK holds above 23, then I will get long.\u00a0 At 20.60 the bid would not drop.\u00a0 This was the catalyst for an explosive upmove.\u00a0 I was in this move.\u00a0 Chop!\u00a0 And later ROK would not trade below 22.80.\u00a0 And I started a long &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/fake-breakdown-rok\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[4676,29,30,18],"class_list":["post-347","post","type-post","status-publish","format-standard","hentry","category-mike-bellafiore-bellas-blogs","tag-day-trading","tag-prop-trader","tag-prop-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Fake Breakdown- ROK | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/fake-breakdown-rok\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fake Breakdown- ROK | SMB Training\" \/>\n<meta property=\"og:description\" content=\"I traded ROK today.\u00a0 It was an excellent trading stock.\u00a0 And it&#8217;s still acting well.\u00a0 Tomorrow if ROK holds above 23, then I will get long.\u00a0 At 20.60 the bid would not drop.\u00a0 This was the catalyst for an explosive upmove.\u00a0 I was in this move.\u00a0 Chop!\u00a0 And later ROK would not trade below 22.80.\u00a0 And I started a long ... 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SMB Capital is an equity prop trading desk that trades on 5th Avenue in New York City. Mr. Bellafiore is a graduate of the University of Connecticut School of Law. 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