Hello, Bulls.  I wanted to take a few minutes to discuss the AXL trade we got into on Thursday in the Boom Factory.

There were a handful of indicators that we should (I should) have paid attention to before jumping in and making an anticipatory trade.   Yeah, upon first look – we had a nice triangle setting up after a long-term uptrend.   The uptrend started back in November and has moved strong since.  However, after the high in January, a few things happened that we need to be very careful about as swing traders.

  1. The long term channel trade that was supported by SMA20 was broken on 1/28.  At that point, we’re officially out of the bull move and can no-longer take changes with anticipatory trades. We have to wait for CONFIRMATION trades.
  2. High sell volume days since dropping below sma20.  Not bullish. This gives us even more reason to wait on the trade to confirm move up.
  3. SMA20 is pointing down with SMA10 below. I’m a fan of sma10 moving up through SMA20 as a form of confirmation that the stock is moving back up.  We almost got it on Thursday when I entered, but didn’t quite get there.. failed confirmation.

The good news:

We’ve been running in a consolidation pattern with SMA50 support below on decreasing volume. We MIGHT be running out of sellers and it’s time for AXL. If that is the case, the entry would really be when 3 things happen

  1. SMA10 crosses SMA20
  2. Strong volume
  3. Price gets above descending trendline.

The bad news:

The indicators are turning south and AXL is sitting very heavy on SMA50.  If it drops below, expect sellers to come in a fall below 13.50 is likely.  Just under SMA50 is my exit point.

AXL Daily - click to enlarge

Again, in summary – we jumped in before confirmation and now we’re paying for it.  Let the tide turn before jumping in the ocean.  Good luck to those who hold it and remember every trade is a lesson.



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