(Click on charts to enlarge, then click on them again for further enlargement. Use the back arrow at the top of your browser to return to the narrative).
Similar to how appealing FCX looked at Wednesday's open when it was indicated to open higher, Ariad Pharmaceuticals (ARIA) was indicated to open higher yesterday at about 6.45, five cents above Wednesday's high of 6.40. My 21 & 55 Fibonacci measures of Relative Strength would issue a Buy Signal on any trade above that 6.40 high.
ARIA had a "sloppy breakout" of the Falling Wedge (pattern in blue), but after two nice white candlesticks, it had three down sessions and, at yesterday's gap up opening, looked poised to go higher.
I placed my order for 5,000 shares at 6.43, anticipating that ARIA would pull back a little to fill the gap from Wednesday's 6.40 close. It did. It pulled back to 6.42, but as you can see from this screen capture, the rotten buzzards only let me have a lousy 289 shares. That's a problem with playing a low-priced stock in size (large order). It can be difficult getting the order filled, as it was for me yesterday.
What am I going to do with a lousy 289 shares of a $6 stock? It isn't worth the distraction to play it, so I sold it for lunch money, at 6.59.
NOTE: The FCX trade reported here was a quick trade that I made on its early morning selloff.
Not getting my order filled on the 5,000 shares became even more disappointing when I saw that ARIA closed at 6.91, which would have been a $2,400 gain from my entry at 6.43. It's frustrating to do our homework and not get paid for it, but we won't let our emotions get hold of us, will we? Curses!!! LOL.
Here's the morning selloff in FCX, which was a retest of the neckline of the Bullish Inverse Head & Shoulders pattern. Retests of breakouts are common, and are to be expected. If the retest is successful, that's validation of the breakout. So far, that retest looks fine (white arrow).
Sometimes, stocks go back below the breakout, as ARIA did after it broke out of its Falling Wedge in the first chart. When that occurs, it's a "knuckle-biter," leaving you wondering if it's valid. Those "sloppy breakouts" are difficult and have to be handled on a case by case basis.
I bought back the 1,000 shares that I sold for 54.56 on Wednesday.
The horizontal red line is where I initally sold FCX yesterday. I expected some resistance there, so I sold at 54.54 and took a $700 gain, then...
...bought those shares back at 54.18.
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