SLW: Nested Falling Wedge Breakout

(Click on charts to enlarge, then click on them again for further enlargement. Click on back arrow to return to the narrative).

Despite the two bearish pattern breakdowns that we looked at this morning (Rising Wedge; Bear Flag), when the larger trend is bullish, as it still is with SLW, we want to continue to look for signs of bullishness. Yesterday's candlestick was a Bullish Hammer in the daily chart, but we want confirmation of that and often the very short-term charts can help us with that.



After the opening gambit to 42.20, SLW settled into this Falling Wedge pattern (in white), which contained a "nested" Head & Shoulders Top. H&S patterns normally are seen at tops and bottoms, but not always. This one was in the middle of the pattern.

Because of the short-term bearishness that we've witnessed in SLW, I was suspicious of the Falling Wedge breakout, but I like "nested" patterns a lot. When SLW broke out of the Falling Wedge for the second time and was moving higher, I put in a limit order to buy 2,500 shares at 41.41. They only filled 200 shares, then took SLW higher, and took out the 41.53 high of the Right Shoulder of the H&S Top. UGH.

I don't like to "pay up" for a stock for no reason, but that Right Shoulder takeout at 41.53 was bullish, as we saw awhile back in the Hourly chart of FCX. I "paid up" for SLW, at 41.53, on that Right Shoulder upside takeout. Mental stop: below the double lows at 41.19 and 41.19.

My initial target was 41.86, which was Data Point #3 of the Falling Wedge and I sold all of my shares on the rally to that level. The risk in selling there is that we aren't given the opportunity to get back in on a pullback, but that's fine. We won't turn our noses up at a gain ;)

I was able to buy back my shares on a retest of that Right Shoulder high of 41.53, I repurchased SLW for 41.58. After the pullback to 41.33, the next target was a rally "toward" the top of the Falling Wedge, at 42.20. Stocks don't always return to the tops and bottoms of wedges, and have to be monitored along the way.



Buying "in size" (a large number of shares) can be a problem, as it was for me again with this trade, only getting filled on 200 shares of my 2,500 order, but that's the breaks and we won't allow ourselves to become annoyed.

The lousy dastards! Curses!



By the time SLW got back to the top of the Falling Wedge, the chart looked so nice, I didn't want to sell it (greed always sets in at these times, doesn't it?), but I "took profits when the target got MADE," like a good little elf ;0



Gain on the two trades: $2,250