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Swing Trade + 27.8% – Woohoo!

March 6, 2010 Business, Equity Trading No Comments


What a month!

With all of the current chatter on (unlikely) financial regulation, (likely) Greek bailout, and potential economic recovery in 2010, FAS is a great ticker to exploit. It’s basically a basket of bank stocks on steroids.

Anyways, in the first week of February, FAS failed to break above the 20 day, Exp. Moving Avg (red line). My interest peaked when it hit the lower Bollinger band (lower green line). The previous day saw an ugly, ugly down move (long red bar). The sell off was overdone, and brought it into Oversold territory (Stochastics indicator – bottom set of black/red lines). With a relatively low risk, I started buying.

Into the second week of February, FAS continued to languish and then consolidated in the Oversold area. I bought more and more trying to lower my cost average (price paid per share) to the point I was comfortable with my position.

My big picture plan was to trade and extract the price difference between the Bollinger Bands (solid squigly green lines) – buy at the lower green band and sell at the upper green band.

Along the way, we witnessed some good battles between the bears and the bulls…

Beginning on February 16th, the bulls came out with much force, and gapped up the stock, which decidedly turned the MACD indicator up (black line criss crossed the red line). 

Throughout February, the bears and the bulls had good fights between the 50 day EMA (squigly blue line) and the 20 day EMA (squigly red line). For a while, every time the bulls tried pushing FAS over the blue line, the bears came back to push it towards the red line. We were in grid lock until the last trading day of February and the first day of March, when the bulls were successful in pushing above the blue line and led their march towards the upper green line.

Around this time, FAS was in the Overbought Stochastics area (which is a relatively safe time to sell), but with some seriously good momentum. Since FAS had not hit the upper green line like planned, I was not yet ready to sell, so I started paying more attention to the Relative Strength Index (RSI). In the recent past, FAS topped out (orange circle) when the RSI reached the upper line (powder blue circle)….

Not exactly perfect, but check out what happened yesterday. FAS not only got really close to the upper RSI line (powder blue circle), it also hit the upper Bollinger Band (squigly green line), and per the original plan, I dumped all of my FAS shares. It is possible that FAS could go higher in the next few days, but I think the bears will be coming back soon to take it down to at least the 50 day EMA (squigly blue line). If the bulls can hold it there, I will be back in the game.

Anyways, after commissions, I yielded + 27.8%, which is damn good for me! It was a good swing trade.

Even Stocktwits gave me a shout out


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