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Morpheus Trading Group
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Deron Wagner is the founder and portfolio manager of Morpheus Trading Group. His daily focus is managing and trading the Morpheus Capital Hedge Fund, which he founded in April of 2004. He also teaches his swing trading strategy with The Wagner Daily newsletter, which provides exact entry, exit,... More
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Morpheus Trading Group
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Morpheus Trading Group - swing trading blog
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Advanced Technical Analysis of ETFs
  • How We Gained 11% On A 6-Day Hold In $BRLI (Trading Strategy And Education) 0 comments
    Oct 14, 2012 11:36 PM | about stocks: BRLI

    Recently, we bought Bio-Reference Labs ($BRLI) as a stock swing trade in The Wagner Daily ETF and stock newsletter. The trade followed-through as anticipated, enabling us to lock in a solid 11% gain on a 6-day holding period. Following is an educational, technical recap of the original trade setup and subsequent price action.

    BRLI broke out to new all-time highs on its weekly chart this past summer (2012). On the chart below, the horizontal dotted red line marks the prior all-time high. Notice how the consolidation over the next several weeks (the yellow rectangle) held above that $26.00 support level (which was prior resistance). We also liked to see the price action holding above the 10-week moving average, which is equivalent to holding above the 50-day moving average on the daily chart. Finally, the dry up in volume during the last few weeks of the consolidation was positive as well. On the long side, we never swing trade in stocks that are trading more than a few percent below intermediate-term support of their 50-day MAs (it is our line in the sand for buy setups):

    (click to enlarge)$BRLI BREAKOUT

    Because of the bullish consolidation on the weekly chart above, BRLI was placed on our internal watchlist around September 17. Once a stock or ETF makes it to this watchlist, we patiently wait for a low risk buy point to emerge, at which point we list it on our "official" watchlist in the newsletter. The setup prior to our actual buy entry is detailed on the shorter-term daily chart below:

    (click to enlarge)$BRLI BREAKOUT

    We were finally rewarded for our patience when BRLI broke through the top of its tight trading range on September 27, thereby triggering our buy stop for trade entry:

    (click to enlarge)$BRLI BREAKOUT

    As you can see on the final chart below, BRLI smoothly followed through to the upside immediately after our buy entry, backed by a strong accumulation day on October 3. On October 4, we sold BRLI when it hits its price target and while it was up nearly 3% on the day. This allowed us to lock in an 11% gain on a six-day hold. The goal of our swing trading system (in a strong market) is to identify low risk entry points in stocks that have explosive potential. These stocks can run 10% to 20% higher over a 1 to 3 week period:

    (click to enlarge)$BRLI BREAKOUT

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