I re-entered AEM short yesterday morning, but didn't like how it looked to be coming back in my face, and NEM kept flashing new highs on the day. That kind of strength after the pattern breakdowns on Tuesday in both stocks wasn't what I expected at all, so I covered my AEM short for a small gain, and decided to watch the price action in NEM. "When in doubt...get out."
As it turned out, I would have been fine staying short AEM. The 49.50 target got MADE, but I switched to NEM and did alright.
NEM had broken and CLOSED below a Bear Flag/Rising Channel in the daily chart on Tuesday. After that kind of break, I wouldn't expect NEM to take out Tuesday's high, but that's exactly what it did. That looked VERY suspicious, especially at the the new high above Tuesday's high, which looked like a Bearish Wolfe Wave #5 Fakeout/Breakout!
Shorting NEM when it came back inside the Wolfe Wave pattern after the Wave #5 Fakeout/Breakout would have been fine, but I decided to wait for a break of the bottom of the pattern, 42.15, and I shorted it right there.
Interestingly, the Wave #6 target line came in right about at the 41.51 low of the Wolfe Wave pattern. As NEM sold off into the 41.50's, I hit the "Buy to Cover" buzzer and got filled at 41.5698. How do they come up with those strange numbers?
The Bearish Wolfe Wave #6 low ended up being EXACTLY 41.51, which was the low of the Bearish Wolfe Wave at Wave #2, so that set up a neckline for a possible "morph" into a Bearish H&S Top, for which Bearish Rising Wedges and Bearish Wolfe Waves are notorious.
I re-entered short at 41.90, which turned out to be a penny below the high of the Right Shoulder. The 41.51...41.51 neckline broke to the downside, putting a target of 40.37 IN PLAY, but we can see that there was horizontal support at 40.80 along the way, so when NEM sold off into the 40.80's, I hit the "Buy To Cover" buzzer again and got filled at 40.8698, another "weird" fill.
NEM put in a low EXACTLY at 40.80 and began to rally back toward the broken neckline, at 41.51. I planned to short it AGAIN in the 41.40's,but didn't get the chance. That's fine. I had an enjoyable, profitable day of trading, and I'm always grateful for those ;)
2 comments:
Melf,
In the event that it wasn't a rhetorical question, the odd price numbers come about because the MM can step in front of their order book as long as they give price improvement which is defined as an incremental increase. Can be as low as tenths of a penny.
Mark,
No, it wasn't a rhetorical question. I get those orders filled and flashed on my screen so fast, it seems like nanoseconds, it's so fast. I don't know how even a computer could come up with an odd number that is so precise that fast, let alone a MM.
But, you must remember that when I came up, it was before the abacus was invented, and long-g before the age of calculators and computers. LOL.
Thanks for the explanation ;)
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