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Robert Edwards
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Contrarian daytrading technician who specializes in locating high probability short term trades while predicting price movement directions with over 85% accuracy. Most of my trading involves either extremely short term micro scalping of stocks or commodities (using 1 minute bar charts), or swing... More
  • Walter Energy (WLT): You Can Successfully Catch Falling Knives! 2 comments
    Jun 26, 2013 11:28 PM | about stocks: WLT

    (click to enlarge)

    Daily Chart Of Walter Energy

    One can purchase WLT every time it hits a new round number low!

    In this article I will show how one can indeed catch falling knives profitably. There is no sicker stock than Walter Energy right now. However, once it hit the price of 14, one can indeed buy on all new low round numbers. To show you how it is done, look at the chart above. Beginning June 12th, one can see how the first time Walter Energy hit 14, a trader could have purchased shares. The following day the stock rallied to nearly 15 and Friday the 14th, the price of 15 was exceeded, so the 14 purchase was indeed profitable. On the 14th, after trading above 15, it fell to 13 (where one would buy) and again traded a bit below 12, so one would buy again there. The following Monday one could take profits on both the share purchases as the high of the day was 13.24, making a little on the 13 shares and a lot on the 12 priced shares. After topping at 14 the following day, we fell to 12 on June 20th where shares should have been purchased and one could get out at 12.57 on the close, or 12.87 the following day. On Monday, June 24th, one could buy at 11 the first time that price was hit and one could have added more on the close at 10.60. The high on June 25th was 11.71 so one would have made a nice profit on both of these purchases. Now finally, on June 26th, WLT hit 10 for the first time and I loaded up by buying a great many shares at 9.95. I am hopeful that on Thursday, June 27th, I will be able to sell out close to 11 and will place my sell order in at 10.96, which is more than a dollar a share profit. At these lower prices below 10, one can probably buy every 50 cents and get out the following day at a nice profit. As the stock drops lower and lower, the pressure to bounce should increase, as the stock gets more oversold. Thus, if this strategy worked at 14, 13, 12, and 11, it surely will work very well at 10, 9.50, 9, etc., in the future. I will update in the comment section what I did so check back later.

    Disclosure: I am long WLT.

    Stocks: WLT
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  • Robert Edwards
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    Author’s reply » In the pre-market I sold half my position at 10.18 only to buy it back at 9.95 soon after the regular market opened. I got really lucky in that I sold out completely at 10.58 and 10.60 when I could see the stock struggling to rally (high 10.62). I bought back half my position near the close as I am still hopeful we get a bit more of a bounce toward 11. If we sell off then I will be buying more as we approach 9.
    27 Jun 2013, 10:45 PM Reply Like
  • Robert Edwards
    , contributor
    Comments (415) | Send Message
     
    Author’s reply » The Japanese Candle pattern that WLT did on 6/27/13 does not have a name but I have named it a flagpole. It is when a stock opens near the low, rallies up and makes a nice flagpole, only to close near the low and complete the base. On the basis of that pattern I bought near the close and already sold out half in the pre-market at 10.38. I will buy back on weakness and am hopeful we get a move today to near 11.
    28 Jun 2013, 08:40 AM Reply Like
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