Sirius Satellite Radio, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Tuesday, October 14?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Tuesday, October 14?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?

Answers:

1) Because it was unusually active, and very volatile.
2) Up. You'd be looking long.
3) Long at 2.39 on a buy stop above the 10:30 inside bar.
4) Initial Protective Stop: 2.33. (max. 2.51%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) Stopped out on 4:00 bar.

Even though the initial risk was only 2.51% it would be sensible to move your stop up to $2.35 after being filled, bringing your risk down to 1.67%. SIRI has jumped about 25% in the last several days so it was pretty stretched.

The stock went more or less nowhere all day and I expected to be able to exit at least 3 or 4 cents above my entry at end of day, but got flushed out as the stock was driven down in the last 20 minutes of the day. It's better to be stopped out than trapped long!

You can see how a "shooting star" forms on the daily charts by looking at the SIRI chart's intraday action. Obviously I would be looking at SIRI from the short side once trend flips down and begin to target the 2.10 - 2.20 level.

Screen captures of my intraday Watch Lists:

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