Trade Review - FSLR - April, 11

Stock Selection Information

The stock had no relevant news today. It was a second day play as it had an important move 3 days ago.

Watch List Reason - 2nd day play

Pre-Market Volume - N/A

Trading Plan - Go long above 36.50

Management

Entry Setup used: Open Drive Flag, Pull back and Consolidation play

Trading Comments

Tape reading helped to enter at a very good price in the pull back and I also could feel the buying preassure in it. People were willing to pay the offer to come in.

Evaluation

The second trade was very well executed, but I had a little trouble building into the position. The fact that I could not get any prints at 37.35 suggested the stock was strong. This is the first time I try building into a position and I like this idea.
You find a level and put the order with a very short stop. If trade start to work, you add another lot on the way up. This way, you have a strong position on the stock if goes in your favor. If not you only losse a few pennies on it.

Building blocks - Volume

The next building block I would like to talk about is Volume. I will continue to develop the idea based on the same example used in the article: Building blocks - Price. If you did not read it, I suggest you do before continuing.

A quick recap: the example suggested that a buyer an a seller concluded a deal of 1 Ipad at a price of U$325. We also have stated that the Ipad´s value is U$400 (determined by Apple) and it was not changed by this deal because there was not enough volume and there was not enough time.

The questions I ask myself now are: Why value was not changed and would is necessary for it to change? To answer this question, we will have to make some assumptions.

Let´s suppose that before that deal was made, Apple had only sold one Ipad for U$400 and we stop time. Now, you decide to buy an Ipad, how much would you expect to pay? I believe the answer to that is "something between U$325 and U$400". Those are the references you would have after 2 deals.

Starting the clock again, but this time, the seller is not an Apple as one would expect. It is our Ipad Dealer at Apple Market Place who has the inventory to sell. His price is U$325 and he sells 1,000,000 Ipad for this price. Now Apple comes into the market with the same Ipad for U$400. I believe Apple would have a hard time trying to sell Ipads in this scenario because the perception of value is U$325 and you would have to be a sucker to pay U$400 instead of U$325. For value to shift back to U$400, the dealer must be out of inventory and Apple has make a lot of deals with the desired price to change the perceived value imposed by the dealer.

We now understand how volume affects price and this is what you should take from this. In order for the value the change, a significant amount of volume must be made at a single price. The more volume has happened at a price, the greater the weight it plays in determine the value.

Daily PM Prep - April, 11

Prep for Closing Session

MARKET CONDITIONS

SPY - Market still treding up searching for sellers. The target for this move is still 160.75. The first trend line is market momentum. If broken, market will begin a slower move. Second trend line is the other important referenc point. As long we are above 158.25 this expectation is valid. This level is important because it is also a support for the bull flag that broke up.
Bias: Bullish
Accuracy: 100% good reading of market movement.

PM Stock Selection Sheet download - sheet has a lot of names, so a secondary filter was used. Stocks that had move more than 2 times it´s ATR and stocks that had fewer volume will be ignored.

Updated at 14:00

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Read this before using the information provided in this page:

Educational purpose material only. Use this information at your own risk
Stocks may be added to the selection sheet at any time. They are used as a guide to select which stocks I will trade and set alerts . It does not mean that I follow all of them, that would be crazy.
The Accuracy information is for my own use only. It is reviewed after I am done trading. This is just a way for me to measure how is my reading of the market and my confidence in it. I suggest you develop your own way to do this.
The morning sheet will be updated between 8:00 and 9:00
The afternoon sheet will be updated between 13:00 and 14:00

Daily AM Prep, April 11

Prep for Morning Session

MARKET CONDITIONS

World Markets News: European markets are higher today. Asian markets finished broadly higher. This is a reaction to yesterday´s movement in the US. Before the open today, Initial Jobless Claims will be released.

Economic Calendar

SPY - Market has broken up it´s range and it is now in trend mode. If we go back below 157.25 and hold, this would be the only bearish scenario for today, where the bulls would be trapped, causing a selling panic. Usually after a strong day, neutral movement is expected, but overall the market is bullish. Target for this move is around 160.75 (current range projection up). Watch for the trend lines, cause momentum could be strong on the way up.
Bias: Bullish
Accuracy: 100%

AM Stock Selection Sheet download
Updated at 8:30