Skyworks Solutions, Inc. (NASDAQ:SWKS) was entered at the close at $6.99.
It never hit our desired entry price of $6.90 (it did get as low as $6.92)
but we stated we were willing to enter the trade below $7.00 so we will just
have to accept this entry price. If you didn't enter the trade, the hourly
chart on SWKS shows an evening star, so you could wait to see if you get a
better entry, say between $6.75 to $6.80 area. Don't forget to set your stop
at $6.70.
The SPY short trade took a loss as we exited at the $140.00 level (the close
was at $140.01 but the SPYders traded under that level in the morning and in
the final two hours of trading). We were hoping for a drop to the $139 level,
but this never played out.
The QQQQs (NASDAQ:QQQQ) put in a shooting star Candlestick and the DIAmonds
(Amex:DIA) a similar pattern (although the length of the upper shadow on the
DIAmonds wasn't quire long enough relative to the body to be called a shooting
star). The SPYders had a similar look. The DIAmonds and the SPYders top of
trading range for the day meets with long term uptrend lines that have been
resistance levels. It is likely we will get a reversal lower from this point,
but we will have to watch trading.
One of the hardest things to do is to trade reversals in a runaway bull market.
The markets tend to be range bound as much as 70% of the time. Trading reversals
works well at these times. When the market is solidly trending, you can also
trade reversals but only when the trend becomes exhausted and you get a significant
move (more than the maximum four percent counter-trend moves we have seen in
the last four months). Otherwise you fight the tape.
Please feel free to send emails with any questions you may have.
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