February 26 - STI

Very nice dummy setup on STI. Price open strong with buyers in control and clearing both PDH and R1. The second bar is also strong, clears R1 and leaves a small upper wick. The third bar is a hammer-like IB with the body filling in the wick of the second bar. Entered above on a break of the 3rd bar high and exit in full at R2 (a few cents below $14). I considered taking a partial there, but I find the market not having a lot of follow through, so I took it all out.

The next one was inspired by the trades that Jamie is doing on the lower time frames. The pattern I saw was an inverted H&S, and the entry was perfect, but I chickened out 4 bar later on the red candle with high volume, so I exited in full. That was totally silly, and if I would have stayed ...

October 28 - SKF

This was one of the best trades of my life :-)

The logic for entering this trade is as follows:
1. Price rallies to point A
2. At point B price retraces below R1 and below the 5EMA. That in itself is bearish, but it was early to tell since at this point SKF could form a C&H pattern
3. Price tries to rallies but it fails to move above the previous day high (point C). Bearish.
4. Price retraces again to point D, which is lower than point B. I have to say here that I entered short on the break of the 13:05 bar, but I got stopped out at break even a few bars later. Bearish.
5. Again price tries to rally but it stops below R1: Bearish. Another interesting point here is that the line from D to E is pretty straight and it resembles a bear flag, but the angle is a bit too vertical and also the volume does not seem to confirm that since in fact we have ascending volume, instead of descending volume.
6. All the above describes a situation in which you have lower highs and lower lows. I entered on the break of the 14:05 bar.
The Q's and the financials were exploding so I was quite aggressive (more than I normally am) with my partial and exit points.

August 27 - RIO (C&H) and charts

RIO is the only one I played. It was a perfect C&H with absolutely perfect 100% fib extension (drawn from the low of the cup to the base of the cup). I still hesitate when the consolidation before the BO does not happen right at the base, but they still seem to work out.


My timing was off on this one so I missed it altogether. Beautiful chart to study. Again the 3rd bar does not close at its low (although it is clearly weak), but if the chart is truly bearish, these ones seem to work out.


Ideally, I like when the 2nd and 3rd bar in the gaps consolidate near the ORH (or ORL), but I am observing that if the second bar is strong and closes at the ORH, the setups tend to work. Something to keep studying.


I wish I would have seen this one in time. The curious thing is that I have this chart open all the time, but I did not see the setup until later in the day. Watching and "seeing" is not the same. Perfect bull flag, price bounces from 20 EMA and 50 EMA, forms a tweezer bottom, and a beautiful hammer-like candle that closes just above the 5EMA. Price takes off from there.

August 13 - Trades BAC and MTL

August 7 - VRSN Trade

August 4 - Trade and charts

Today was the day to be short on oil, metals, etc. But I was focused on the wrong stocks and sectors so I missed the nice moves today. The only trade I took today was on GS and that did not work out well. The other charts are for my collection of cool charts (and really the type of charts I would like to trade).

Tonto Trade - MOS

MOS formed a nicely shaped C&H, but the volume formation was not great. The base of the cup is at 130.50 so I placed my stop buy order at 130.52. The interesting thing is that my internet connection crashed and I had to restart my computer, so by the time I was back up I have totally forgotten about this setup. Anyway, a good 40minutes later, my order gets triggered and since I still liked the setup I stayed in the trade. I did not feel the volume was strong enough to push this baby to the 38% fib extension (drawn from the base of the bottom to the top base of the cup) so I took a partial at the 25% fib extension. Exited the rest at the end of the session, which was exactly at the 25% fib ext.

Tonto Trade - HES

First chart shows yesterday’s C&H formation, which promised to complete taking shape today.


The second chart shows my entry and exits. The interesting thing for me was that the points marked A and B in the chart took place without any consolidation at the base of the C&H (previous day’s high) and therefore they are not reliable entry points. I entered at point C. Another motivating factor for me was that HES kept making higher lows, And the last element to this equation is that OIL is IMHO due to a bounce, and this morning showed definite signs of strength. For a moment I dreamed that HES might touch $100. Anyway, the stocked turned around at noon and ended printing a doji day in the daily.

Tonto Trade - MT

Oil/commodities were showing signs of strength at the time of my entry. That together with the 2IBs at the base of S2 motivated me to get into the trade. Entry was at $76.55 and stop loss set at $76.25.
Also, it is interesting to note that the 3 bars previous to the 2IBs of my entry are WB and quite vertical, that is why I did not think this motion could be interpreted as a bear flag formation. The high volume of buyers after my entry confirms that the 2IBs are truly a pause in the upward motion.

Overnight Trade - SU

I started late today so I missed the morning action. I found these nice 2IBs with declining volume at the base of the previous day's low. I decided to keep this one overnight, based on the guidelines from Stewie for overnight holds (ONH).
I have been paper trading the ONH for a little while, so today I decided to give it a go with real money (small size position).

Tonto Trade - RMBS

Today I was watching RMBS because of the bear flag in the daily chart (mentioned in last night's post). The first bar printed a long shadow (bearish) and the next bars showed more signs of weakness. At around 11am, RMBS printed 2 NRIBs with declining volume, so I jumped in. The entry and exists are marked in the chart.

Tonto Trade - SLB

Today was a very nice day for me, considering the choppy action in recent days. I am posting this now because I am taking the rest of the day off from trading.

SLB gapped down and printed a nice symmetrical triangle (can also be interpreted as a not-very-orderly bear flag), accompanied by a nice volume contraction at the base of the previous day low. My entry was at 96.50 and my stop loss was set at 97.00. The stock collapsed on high volume and I took a partial at 94.19 (daily PP) and exited at S1.

Tonto Trade - AAPL

The chop fest continues :-(

This trade is very straightforward: 2IBs at the base of a daily PP (blue line). AAPL reaches the partial target right away (another daily PP) and then retraces to a point where it hits my protective stop.

Tonto Trade - PBR

I have to attend some personal business so I am calling it a day, and a very good day indeed! PBR and Oil in general were strong at the offset, but at around 10:15am the market mood changed. We can see in the $XOI index how price is unable to maintain pressure above the previous day high. The 4/15 bar for PBR is a very clear bearish engulfing pattern and that catapulted price to test the previous day high on high volume. After that, PRB started to print an orderly bear flag on decreasing volume. The pattern is not as easy to see in the 15min or 5min as it is on the 1min chart, so I decided to manage my trade of the 1min chart. Price found the appropriate resistance at R1 and at that point I decided to jump in. My entry was at $62.58 and my stop loss was $62.83. Price collapsed at that point and since other Oil stocks were also quite weak I did not take a partial at the previous day high. I held it until $61.00 (PP) where I took a partial and I was stopped out 10 mins later.

Tonto Trade - AMZN

I could only trade for a few hours in the PM, but I found an interesting round top (bearish) against the downtrend line (marked in light blue). Since the previous attempt to close above that line around noon failed, I decided to jump in on the second one. My stop loss was the top of the round top. My first target was S1 and I thought the market would keep falling, but buyers stepped in and took AMZN to the $70.50 area, which is an important PP in the daily. It will be interesting to see what happens with this one tomorrow.

Failed Trade - PCLN

I am saving the chart from this failed trade so "hopefully" I'll remember the clear warnings next time. This is a C&H pattern and although the actual shape of the cup and the handle are OK, the volume is not quite right. There is a volume spike (10/5) way before the top of the cup line @113.00 and by the time price makes it to $113.00, the volume is quite low. Additionally, I do not see volume picking up as the handle line approaches $113.00.
Ideally, we want to see volume increase at the two high points ($113 in this case) AND we also want to see volume decrease at the two low points.
Here is a great example of a nice shaped C&H with perfect volume formation from Jamie's site (scroll down to the RIMM trade).

Tonto Trade - RIMM

I was inspired by Jamie’s post last night, so I decided to explore the 1min chart today and I found that RIMM was printing a nice bull flag at the base of the intraday PP @ 118.00. The trade worked like a charm (considering that I could only trade for a few hours today). The entry en exits are marked on the chart. Cheers!

Tonto Trade - AMZN

I missed some of the morning action and I am leaving early to a job meeting. I am quickly posting the chart with my notes.

Tonto Trade - SOHU

I have to leave for a meeting but I wanted to post this trade before I go. The first chart is a daily for SOHU. I have been following SOHU for the last few days because it was setting a nice B&B at $70.50.


The second chart shows how I executed the trade. SOHU gapped down, tested the $70.50 area and then tried to rally; but it could not take the down sloping 20EMA on a closing basis. Then SOHU started approaching the $70.50 line while observing the 5EMA on closing basis. My trigger bar crossed the previous day low line with very low volume and although it did not manage to close below $70.50, I thought the price would explode when it did. I placed my Sell Stop at $70.55 just a few cents below that bar. The next bar was an inside bar with increased volume and then price fell. Typically I take partials at the significant pivot points, but today I decided to ignore them mostly because of the orderly move (and gut feeling). I draw the fib extensions from the previous day high to $70.50, which almost matched perfectly the previous day low. I took a partial just a touch above the 61% fib ext and was stopped out a few bars after that. I was aggressive with my stop loss because SOHU was showing some signs of strength at that time.

Tonto Trade - BAC

I am not staying for the FED action today so I wanted to post a chart before I quite for the day. For BAC, I liked the ascending triangle on the 5min chart (and the action looks also good on the 15 min chart). I liked the contraction of price range which lead to an expansive move. I entered at 27.31 and my stop loss was set at 27.20. First target was at R2 or 27.62 and that was reached in less than 10 minutes. I was hoping BAC will get to 28.00 and I would had exited there because it is a nice round number, but BAC reversed before that point. My entry and exits are marked on the chart.