On Tuesday, February 14th we traded PHMD (PhotoMedex Inc) in our CyberGroup Trading Room. One of our top criteria that we require for stocks we plan on trading is substantial volume. This stock is a good example of why we are always looking at our scanners for trading opportunities throughout the day because volume can kick in at any time. At first, volume was a bit low and then it started to really increase just before 10 am.
Our instructor Josh Levitan was calling out what he saw on PHMD, including rising volume and a “Fausto Flag”, one of the many chart patterns that we rely on. This pattern (outlined on the chart with purple lines) is known as a consolidation pattern where we expect it to be bullish due to increased buying at higher prices and sellers attempting to defend the resistance at $2.40. We like to react to the breakout instead of predicting because this pattern can and does break out in the other direction occasionally. The $2.40 level, which acted as resistance, soon became support later in the day. After 10:30 am it was obvious that according to volume, interest waned off and there were fewer opportunities. It’s important to trade when you have the edge and back off when the stock is not in your favor.
When you see a good set-up for a stock you don’t have much time to waste until it’s over. That’s why it’s SO important to have a trade plan with a defined strategy and the proper tools to execute it. If you want to learn more about how Fausto Pugliese and his team of instructors trade the market each day with success, please join us for our next FREE online presentation.