I traded this $LITB today in the chat room. This is one of those hot new Chinese IPO stock that I have traded many time before. I missed the first morning breakout and was eyeing the stock all day for a late day breakout entry. Momentum stocks need to consolidate during the afternoon hours. If it’s late in the day, I switch to a 15 minute chart with 9 and 20 EMA. Usually momentum names will bounce on either the 9 EMA or 20 EMA on the 5 minute chart. Let’s see how LITB setup during the day on a 15 minute chart.
I missed that first flag breakout at $16.90 after consolidating above both 9/20 EMA.
Flag setup can be seen on the 15 min chart. Look at that candle bounce on the 9 EMA and previous resistance at $16.50. This is a clue that there was buyer for this stock and we can buy that stock on a flag breakout in anticipation that this will test the recent high of $16.80 and more. Our risk will be also be low and if the trade doesn’t work, we will only lose a small amount.
Long $16.64 with stop right below that 9 EMA around $16.50 area. Big move on the stock as that stock makes a high of $18.18!
Our risk was 14 cents with gain of $1.54.
Hope this helps! We cover this type of setup in additional detail in our Bootcamp classes.
Szaman, thanks this was excellent. Would you be willing to discuss some time what time frames respond best to different times in the day and which SMA/EMAs respond better or worse at different times of day?
I use 3 min 9/10 ema till 10.30 AM, then switch to 5 min 9/20 EMA. After 2 its 15 min and 9/20 EMA.
Thank you !
What’s the reason behind changing the timeframes?
Late in the 15 min.usually works better.
This was one the best trades I have seen you take. I just wish you would send out the alert like mb and Kunal. Would make it easier for everyone to participate. Stop thinking about it, and just do it.
I don’t do alerts that’s Kunals thing. But i make sure to mention it enough(like 10 times) in the chat so u can watch and play on your own.
Hi szaman,
Congratulations! This was a sweet trade!
What scans do you find to be the most helpful? And what program do you use for your scans?
Thanks,
Sue
Damn that was a great trade!
Wow, this is a beauty, and thank you for the lesson.