Friday, December 7, 2012

Failed Breakouts: AET and AMTD

I see two persistent breakouts today: Aetna Inc. (AET) and TD Ameritrade Holding Corp. (AMTD). Both broke to the upside.

"Persistent" means they've stayed above the 20-day price channel since breaking out.

A third issue, the SPDR S&P MidCap 400 exhcange-traded fund (MDY), failed to stay above the breakout level.

The two persistent breakouts, AET and AMTD, have extremely low five-day trend scores, both ranking at 0.11. I generally want to see 1.0 or better before I like a trade.

Both had lows higher than the prior day's low on only two of the five trading days prior to breakout. That's not much of a trend.

And the closing price on the day prior to breakout, in both cases, amounted to only 28% of the average daily trading range.

I want to wait before opening a position on either one of these guys. One reasonable way to do that is to raise the breakout level to the 55-day channel (a standard breakout point in the Turtle Trading method that my rules are based on), and then score the trends again.


My trading rules can be read here.

And the classic Turtle Trading rules on which my rules are based can be read here.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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