Trade dissection: ISM

Welcome to another of my trade dissection posts. I'll try to post more of these in the future. Just need to make more trades that are worth dissecting.

First of all, I purposely didn't trade this during the time it was still in the yellow box (Figure 1). 

Why not? It's because I didn't understand the setup. I have a general rule of trading only something that I understand and know well.

Yes it was going to AOTS soon. But for me it could still trade within a range since it's too close to the identified recent resistance for me. The reward wasn't as good. So no trade yet however it was moved to my watchlist.

Figure 1

After breaking the identified resistance, I was waiting to see what it would do next. I made a box and visualized what it could do (Figure 2). My bias was it would go down and hit the box bottom and then make the next move up. Sort of like a breather so it can gain some more strength.

Figure 2 

This (Figure 3) was the reason why I was not convinced of it's move yet. Switching to the monthly chart, we can see that it seemed to hit the darvas and 100ma resistance.

Figure 3 

Aaaaand Ms market proved me wrong. As can be seen in Figure 4, it made a breakout from the identified box and would then be halted. I missed this trade because I was too focused on my bounce plays for that particular day (DD and VITA). No worries though, I know that if a stock is really good it would still give buying opportunities somewhere down the line. Just have to wait and make the necessary plans.

 Figure 4 

So what happened next was this had all the ingredients for the sell on news phenomenon as seen in Figure 5.

- you start with the double serving of disclosures and trading halt
- a generous serving of gap up. about 8%
- add in a sprinkle of increased volume. More or less 6M shares worth in the opening minutes
- and finally a dash of adrenaline and danger for those who got too excited and would buyup

It hit the next identified resistance in the monthly which was 2.6 and went crashing down.

 Figure 5

After watching everything crash and burn in the early morning I waited for things to settle down. As usual, I made plans and identified the potential bounce areas where I would wait. 

Went and took a nap as well.

Woke up at about 1030 earth time and was pleasantly surprised to see that the price seemed to be holding very well(Figure 6). Switched plans to buy at the unchanged or near it.      

 Figure 6

And the rest was history (Figure 7).

 Figure 7

Wasn't able to sell at the highs though. My schedule right now is causing me a lot of problems. But I was able to salvage a good enough gain. 

Ms Market will always reward those that can make flexible plans. Those that can make changes on the fly and execute them. Opportunities are still out there. It knocks on the doors of those that prepare. Are you prepared?