As mentioned in yesterday’s post, today has been tricky with the market gaping up into Major support (near yesterday’s prior highs) and setting the high for the day at 9:35 am @ 65.87. Then the market sold off making a lower high at 10:00 am and continuing lower. We currently are in a 5 minute downtrend in the QQQ and I would imagine that most traders are SOH (Sit On Hands) until the Fed announcement at 2:15 pm. My first and only trade was in GILD which I found on my gap up list this morning before the market opened. I’ve come to like gap plays because they trade independent of the market, and make excellent plays on Fed days where my bias is usually “Caution”. I found my entry on a 1 minute chart of GILD which price had formed a narrow 5 bar base. My entry was over the top of the base and the stop was below. Price action in GILD ran up nicely for the first 5 minutes then I was stopped out by a bad tick in the market. I saw the print so it was real, but the large bottoming tail on the fifth bar up hit my stop and caused my platform to sell off my entire lot size. My play ended with a full “R” of profit so I guess I could live with it 🙂 I chose not to re-enter the play, although GILD pulled back and setup again, because it’s a Fed day and these days can be a day traders nightmare, so I just had another cup of coffee and watched. Besides, a trader who makes 1 “R” (Risk Unit ex. $300 per trade) unit per day makes a great living… Here is the chart for my play in GILD.
GILD10242012