Credence Systems, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Wednesday, October 15?
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 Wednesday, October 15?
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.
... (the scanner picked it up at 9:37)
2) Up. You'd be looking long.
3) Long at 14.26 on a buy stop above the 11:00 down bar.
4) Initial Protective Stop: 13.84. (max. 2.95%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.

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The initial stop is under 3% which is an amount I'm comfortable with, but if you wanted to tighten the stop up it was possible to move it to $14.22 more or less immediately. The 11:30 bar where you were filled formed a "bozu" which is a strong candlestick, and getting right beneath it with your stop is smart.

You can't get much tighter than a 4 cent stop on a 30-minute chart. The close at $15.42 gave $1.16 of profit per share, for a reward to risk ratio of nearly 3:1 off the "loose stop," and of course with the super-tight 4 cent stop the reward to risk goes to an absurd 29:1. Remember that money management is the Holy Grail.

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Screen captures of my intraday Watch Lists:

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