Let’s talk about price movement and the stocks you are holding or contemplating buying.
85 to 90 percent of price movement in a stock with no recent news is caused by the overall market. If the DOW and other index’s are up or down the equity you are holding is generally just following them around. This being the case, it is definitely in your interest to know what is going on in the macro market. Currently, 7/7/2015, the markets have been down for the past week with the Greek jitters.
I bought URI the first time at $88.70 with a target around $95.00 but it couldn’t get thru 93. After the second hit there I sold ¾ of my position at 92.64 as it backed away from 93.00. The original target had been $87 which it then went down to and hit where I added to my position. Now I’m in at 87.79. URI went back to 93 in two days where I sold half my position and put in a stop market order at 90 bucks. I was stopped out a week later. I held a hundred shares.
As you can see from the 60 minute chart above URI went downhill for seven days.
Some of the things I’m looking for in a reversal are (1) a sharp move down into (2) support with an equally sharp reversal. The next thing I want to see is a good reversal pattern.
In the 15 minute URI chart below you see an excellent reversal pattern. The pattern here is called a cup and handle.
The pattern here is called a cup and handle. This is a reliable reversal pattern although this has not been fulfilled because it has not broken the bounce high at $83.39. Normally when trading this pattern you would buy at the breakout of $83.39. Here I’m using it as confirmation of my decision to buy at $82
Overlaid on the pattern is Fibonacci retracement that is modified to show only 0, 50 and 100 percent. It brackets the high and low of the day. . If the price had dropped below $81.75 I would have sold out and expected URI to continue lower tomorrow. FYI, I think 50 percent is a very big deal.