Trade: Long WCG April 2010 $30 Puts - 3 more contracts at $2.00 each, overall cost basis per contract now $3.25 (total position 6 contracts)...WCG was trading at $29.29 high reached 29.76...this is within 1.6% of retest high.
Set-up: 18-Feb-10 set up on Daily chart on both 20D Accel bands and 30D $R.
Confirmation on both Accel band and %R on 19-FEB-10.
Conditions: Efficiency Ratio, Stochastics, MACD, and ADX/DMI are all very bearish.
Re-Entry: %R retest on 3-MAR-10...High of day is $29.76
Exit strategy: if 29.76 is violated.
Target for profit taking: when position reaches 50% profitability.
Stop loss: close above $29.76(%R Retest bar's high).
Time Frame: Prepared for 1 month+ holding period.
Where found: IBD Stocks on the move
Current P/L: -$705
Emotions:
This was very difficult as WCG is now within the accel bands and this is the 3rd up day in a row. The company got an upgrade today and was called an acquisition target by Stifel Niclaus. Regardless I put the trade on based on %R retest rules. The stock gapped up and seemed to fade back down. It could be retesting the high of the setup bar, and the gap should be resistance.
Stochastics, Efficiency Ratio have also retested now. ADX remains above 40.
