The Fishhook Setup by Scot1and

http://educsos.blogspot.com/2014/09/the-fishhook-set-up.html

I see this strategy works quite well recently. Scot1and looks for the low priced stock (I believe <$5) with prior negelect, then suddenly one day with a big breakout. The strategy is to trade the upside momentum continuation after a few days pullback (within 5 days after the breakout). The entry is prior to the close on  the very first up day. The stock should close at HOD or close to HOD on the up day. Usually the stock should gap up the next day. This is a short term trade. I find out that stock can go up till 12pm next day then fade away. So it is important to sell into strength to take profit.

I think recently the stock UTHR also qualified for this strategy. The entry should be on 08Sep then sell next day. Even though UTHR is a high priced stock, it has the same behavior.

Vehicle identification with the initial thrust is important.

Sentiment: Open Interest Configuration

http://www.schaeffersresearch.com/schaeffersu/expectational_analysis/open_interest_configuration.aspx

Sentiment: Open Interest Configuration

To analyze stocks, we often use option open interest as a means of measuring the relative levels of investor optimism and pessimism. Open interest is the number of outstanding contracts on an option class or series. Open interest will increase by 1 contract when a buyer enters a new long position while the seller is entering a new short position. Open interest will decrease by 1 contract if a buyer is closing an old short position and the seller is closing an old long position. And open interest will stay the same if:

• A buyer is entering a new long position while the seller is simultaneously closing an old one, or,



• A seller is establishing a new short but the buyer is simultaneously closing an old position.

One way to use open interest to analyze sentiment on individual stocks is to examine the "open interest configuration" using front-month option data. The open interest configuration of a stock is simply the number of open puts or calls at the various strike prices and can be illustrated by plotting a chart with adjacent call and put bars representing the open interest at every strike price. This approach has proven effective in determining possible resistance and support levels. How?
Option strike prices are usually round-number levels that tend to serve as support or resistance, as buyers view pullbacks to such levels as good entry points for long positions or potential closeout points for short positions. Sellers, on the other hand, look to rallies to round numbers as opportunities to exit long positions or to establish short positions. The fact that there may be significant option open interest at strike prices corresponding to these round-number price levels serves to accentuate their significance as support and resistance.
Often times, you will see us reference how out-of-the-money peak call open interest can act as resistance and out-of-the-money peak put open interest can provide support for a stock. Here is an examination why and how open interest can act as support or resistance.
There are 3 reasons peak (or heavy) out-of-the-money call open interest can act as resistance:

• A large accumulation of call open interest can define a point of extreme market optimism, which usually coincides with the depletion of buying strength. When this strength is gone, it takes less selling activity to change the stock's direction.
• Those investors that sold these options may buy the underlying stock to balance their bearish position from selling the options. These long positions will ultimately be sold when the options expire or the call buyers unwind their positions.
• Finally, call sellers that don't hedge their position will try to pressure the market as it approaches the strike that the calls were sold in order to protect themselves from losses.

Let's take a look at the 3 reasons that peak (or heavy) out-of-the-money put open interest can provide support:

• A large accumulation of put open interest can define a point of extreme market pessimism, which usually coincides with the depletion of selling strength. When this strength is gone, it takes less buying activity to change the stock's direction.
• Those investors that sold these options may short the underlying stock to balance their bullish position from selling the options. These short positions will ultimately be bought back when the options expire or the put buyers unwind their positions.
• Finally, put sellers that do not hedge their position will try to support the market as it approaches the strike that they sold in order to protect themselves from losses.

some reading quotes

The ideal set-up is a stock emerging from a constructive consolidation with strong accelerating earnings and sales.

optimal position size should be based on their own risk/reward and risk tolerance. For instance, if you’re a 2:1 trader, your optimal position size is 25%.

The research shows that EVERY bull market in history has had an accumulation day (also referred to as a “Follow Through Day”, or FTD) as a prerequisite. So, there is little reason to look for a new bull market without first having the FTD occur. Trying to pick the bottom turning point is a fruitless exercise, so we wait for the market to prove to us that a bottom may be in place.

Trading for July 6th (Friday)

Market was down more than 1 percent on the Friday. But there is no fear and major damage so far. People are optimistic for the market even though the US employment data was reported below expected on Friday. I am also optimistic even though my 401k was down 1 percent also. I feel this should be a good dip buying opportunity. The market could dip even more early next week, but I feel it will come back.

So far I am holding three positions, BWLD, CRUS and LCC. There first two are under water for around 3 percent, which I bought on Thursday hoping for a follow through break out. I do not worry too much for the first two, as they are having good fundamental and charts are in consolidating mode. When market is good, they will break out.

LCC is a good trade so far. I was up 4 percent intraday, but the profit faded. Hopefully I can see continuing upside in LCC.

TNA method from BH

http://fivetrades.blogspot.com/2012/06/tna-method.html?m=1

BH introduced a TNA method, which is discussed in Stockbee forum in the past year. Based on the previous performance, it is a reliable method to trade TNA and timing entry for 401k.

新人必看书籍 trading books from Mitbbs

TA方面的书籍这本非常不错，请你至少看3遍，网上有PDF.
《Technical analysis of the financial markets》

FA这本不错，网上也有PDF:
《Intermarket Analysis - Profiting from Global Market Relationships》

其他书籍及阅读资料：
http://www.maofou.com/ （中文网站）
http://traders-library.com/download/ （英文PDF书籍）

The above links contains tons of trading books. I even find the pdf file for the classical market breadth book written by Greg Morris. Super nice finding today.

Back for trading

My trading activities were very limited from May due to the market behavior. On June, I only made three trades. All the three trades were losing trades, which I stopped out next day, then were up 10 percent in the next two or three days. I felt the market were in some range and not very tradable for person like me with a full time job.

Now we are in July. Market starts showing the consistent buying in the past few days. The market breadth is dramatically impoving from April. Now it is a good time to trade for breakout setup, look for good intermediate term investment opportunities.

I moved my 401k into funds instead of cash on July 2nd. I will look for trading for setup.

Happy July 4th.