Wednesday, July 1, 2009

Previous day levels

Many times, a stock that is in play one day, breaches its levels the following day. An example of this occurred in SCHN. Lets follow what we saw the last two days, and more specifically today.

SCHN reported earnings pre market yesterday and was weak all trading day. It gapped down $3 on the open, and proceeded to close slightly above it 52.40 intra day low.
Coming into today, SCHN did not appear to be an active stock. However, the 52.40 level was key as it was yesterday's low (of a high volume day) as well as a potential breakout on a daily chart. What proceeded to happen? SCHN broke the 52.40 level at 1:30 CST, never to print that level again on the day, selling off to $51.
A simple alert and proper risk/reward ratio would have led to a profitable trade.

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