Kane Trading - Education for Serious Traders

					January 9-11, 2004 Commentary (weekend edition)- Today I'm going to review some trades and potential trades that we have been following. Let's start with the VTSS play. VTSS has really started to rocket off the grouping. Now the question may come up: what's my 'profit target'? I don't have one. Those who have read Kane Trading on: Trailing Stops know why. I'm managing this play with my combination trailing stops/scaled exits techniques. I'm going to let the market tell me when and where to take profits. VTSS has reached within two cents of a .618 retracement from the October high. It has also penetrated above, and then closed below, a downtrend line from those obvious swing-highs. If that's not a place for profit taking, what is? Again, I'm not going to continue with my scale out until the market tells me to do so. I am using the information about the factors that I've just mentioned to, perhaps, tighten up my next scale out criteria a little bit. Otherwise, I'm just watching the price action. I don't care that much about what might happen, I care about what is happening. VTSS will tell me what to do, and when to do it. Next, let's look at the FISV play. I'll first show the daily chart, highlighting the pattern and the grouping that I built. This is a very interesting play. FISV has spent an inordinate amount of time right at the grouping. It did one very quick spike well over the grouping, and then it began to fall off. The most interesting aspect to me about this spike was how low the volume was. There were entire 1-minute periods at the peak where no shares traded at all. This is on a stock averaging over 1.6 million shares a day right now. Now recall that FISV is the play where we have a larger pattern waiting above this grouping. Let's look at the weekly chart. The arrow points to the pattern shown on the daily chart. FISV doesn't seem to want to reverse off the daily pattern. The weekly context shows me a possible reason why that might be. If FISV does break out above the daily pattern and grouping, I'm expecting it to reach for the pattern completion on this weekly chart. I can't say that it will actually do that, of course. I'm just saying that if it sets up in a certain way, I'm looking to play the failed daily pattern in favor of the completing of the weekly pattern. And then possibly play the weekly pattern. I would greatly prefer if we could get a little bit more of a drop off the daily pattern, and then take the daily grouping out, to set up a better failed pattern trade, based on my preferences. I'm still not thinking that a play off this daily pattern is off the table for me, either. It's just not a play that I would take with a 'regular' entry trigger. Not with the weekly context that we have. I'll keep following up on this trade as it plays out. Let's finish with a look at FDX. I'll start with the daily chart, showing the pattern and grouping(s). FDX gave a small bounce off the top of the first grouping, and has since plunged down to the middle of the second grouping. This is the point that I'm now looking for an entry trigger. Recall that FDX is the one with the incredible overlap of several retracements from the October '98 low and the September '01 low. Let's look again at those retracements on the weekly chart. FDX is just about right at the lower pair of retracements. This also corresponds with the bottom area of the lower grouping on the daily chart. This is where it has to happen, if I am to trade this pattern. But look at that weekly bar. A plunge down and a close near the low. I am not about to take a trade like this without a confirmation entry trigger. As an exercise, look at the weekly volume. Go back for ten years and see how many times the weekly volume has exceeded the level for this last week. On the other hand also note the nearly complete lack of significance of the few major volume spikes to the trading direction. I will be watching FDX closely here for signals. The ability to place a very close technical stop on this play is a big plus for me. If the pattern is to work and the major retracement overlaps are to hold, FDX has to make a move right in this area. Anything very far below the lower retracement overlap on this weekly chart and I'd want to be out. I'm also very alert to a possible failed pattern/grouping trade here. If these areas don't hold, I am looking to consider a failed pattern trade. This is a significant setup, supported by the weekly chart. If it doesn't 'work', I'm looking to see if I can capitalize on that. I'll follow up on this play as it proceeds, as well as on the other plays that we have been watching.


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