NKTR: A Winner That Could Have Been Even Bigger
On Wednesday we sent an alert to initiate a long swing position in NKTR.
We were filled at $99.54.
It was based on my Plus One/Minus Two buy strategy that identifies entries in runaway moves.
On Thursday, we sold half the position at $102.82 for a quick $3.28 gain. In keeping with our swing trading strategy, we raised our stop to breakeven.
We then sold the second half at $102.51 for a $2.97 profit.
The reason we sold the 2nd piece on Thursday is that following an opening spike high, NKTR offset the gap and triggered an Opening Range Breakdown. (one of the strategies I teach in my course)
When NKTR rallied back, it looked like it was testing highs and a gift to lock in a profit on the 2nd piece.
However, NKTR bounced back and cleared the morning high. This was bullish action and it perpetuated a Late Day Breakout in the last two hours of the session.
In a Late Day Breakout, a stock runs into the bell, and NKTR did just that, closing on its high tick of the day.
In hindsight, there are two ways this set up could have been handled differently.
1) I could have just left my stop in at breakeven on the 2nd piece and see what the market gave me.
2) I could have reloaded late in Thursday's session, which delivered another 4 points of profit. When NKTR reversed higher, there was only blue sky into the bell.
Play: Breaking Down an Eiffel Tower Play
PLAY has been in a persistent downtrend since leaving a weekly Lizard sell signal in June 2017.
It showed poor relative strength during the market's bounce off the February 9 low.
Note the false breakout in December 2017 above a declining weekly trendline (green). That perpetuated a plunge to the Head & Shoulders target near $45.
But now a larger Head & Shoulders pattern may be on the table, with a break below $45 signaling a drop to $40 or lower.
PLAY looks like it has traced out an inverted Cup & Handle (bearish).
The current 5 week shelf is the possible handle.
A move to $40 would satisfy the right side or downside of an Eiffel Tower pattern.
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