STX followup
In THIS POST back on August 12 I answered a comment by billyjoe concerning STX on the short side. It was a lengthy reply detailing conditions I’d look before shorting. At that time the stock was on the bullish side of a fuzzy C but the general bias seemed short to me. Excerpts from my post:
“Bias is short side (for STX). But at current levels one must really think about whether the r/r offererd is worth it….should the 19.80 fuzzy C fail, then one has a very logical reason to short into any strength it offers thereafter” but “potential is there for a bullish bounce on the weekly from a fuzzy 5th completion into the abc correctives up….as long as 19.80 holds”
So how accurate did this forecast turn out to be?
Well the conditions for the short setup I spotted never eventuated, and price remained on the bullish side of the 19.80 fuzzy C. Note the chart and the support play at that fuzzy C 19.80 level…….at the end of the day it was a great long play for +15% to price resistance. I’m not sure I would have traded it myself, but that doesn’t mean there’s not a lesson to be learnt from the price action relative to the support spotted. Had you been stalking for a long in STX, would you have considered the TA I offered in August? Would you have set an alert at that 19.80 area? Would you have executed had price returned to that support? While 20/20 hindsight makes it look simple and easy, I still think it’s worth considering the price action in STX. It’s a classic bit of TA dealing with Fuzzy C and gap support and price support, offering the chance to buy into weakness and selling into strength. 15% in 7 trading days is great. That’s the kind of trade you want to stalk for. How does one do it? One sets alerts and hides in the bushes patiently until the alert goes off and the conditions met.
And remember, Vector was bullish in August. The general bias in the market was long side and STX benefited from it. Moral of the story?? Trade in-line with Vector where possible and spot those Fuzzy C areas! They might just spot you a great risk reward setup. In STX’s case, long at the fuzzy C support I spotted, buying into some strong weakness to support areas, endured a 2% stop and gave a quick +15% bullish move in 7 days to price resistance. With those numbers, the r/r was 7. Pretty good really.