What We Can Learn from the Three Failed Breakouts in AKAM (How to Spot and Avoid a Trap)

Apr 22, 2015: 11:52 AM CST

How do you identify and avoid a Failed Breakout or getting caught in a Bull Trap?

Akamai Technologies (AKAM) – a strongly trending stock – offers a key lesson in this important topic.

Be sure to study Part 1 of the “Lessons We Can Learn from the Breakouts in AKAM.”

Failed breakouts or traps scare many traders away from trading valid breakouts, but what key factors often differentiate a successful breakout from a failed one (trap)?

Let’s highlight the 2014 period that saw three failed breakouts trap traders into frustration.

Could this have been avoided?

The chart above provides the perspective from the strong trend on the weekly chart.

Again, study the four successful breakouts from the prior post but focus your attention here on the traps.

We’ll zoom-in here on the Red Arrow, the period of failed breakouts throughout 2014.

AKAM’s chart teaches us what to look for if we take a breakout trade that is very likely to fail soon (trap).

Take the perspecitve and focus on the Red Arrow as we drop to the Daily Chart for clearer insights:

Continue Reading…

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What We Can Learn from the Many Breakouts in AKAM

Apr 22, 2015: 10:59 AM CST

Not only is Akamai Technologies (AKAM) triggering another successful breakout trade right now, but we can step inside the history of repeated breakouts and learn a real-world trading lesson from this stock from prior outcomes.

Let’s start with the Weekly Chart, highlight the breakout, and focus on what this stock can teach us now:

I highlighted five prior breakouts (green and red arrows) on weekly chart above as the uptrend strengthened.

Let’s start with principle #1:

“Stocks which are strong tend to get stronger, not weaker”

In other words, trends – once established – have greater odds of continuing than of reversing.

AKAM exemplifies this trading principle very well. Continue Reading…

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April 21 Gap Trap Surprise Market Update and Stock Scan

Apr 21, 2015: 1:51 PM CST

As we’ll see on the intraday chart, today’s session was a continuation of the sideways range that developed after Monday morning’s big upside gap.

Despite early morning bullish action in the futures, price retraced and has traded lower/sideways all day.

Let’s dive inside action and note key levels and the trending stocks of the bullish day:

Be sure to brush up on the “S&P 500 Range Planning” post for a broader perspective.

We’re still within the context of the sideways trading range mentioned earlier, though the morning action threatened a breakout.

The breakout failed and the bias will be to the downside, especially if price remains under the 2,100 pivot.

Use 2,100 as the intraday inflection point and don’t be surprised if price falls back into a familiar groove and falls down away from 2,100.

By the same logic, don’t be surprised if – like February – buyers intervene and thrust the market via a short-squeeze pathway to new highs.

Be prepared for either the “Range Continuation” or “Range Breakout” scenarios.

Continue Reading…

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Bullish Breakout Opportunity for You in ODFL

Apr 20, 2015: 1:23 PM CST

Traders are carefully watching a critical level in Old Dominion Freight (ODFL) which is setting up a possible breakout buy opportunity.

Let’s highlight this level, note the entries and targets, and possible play setting up right here right now.

Here’s the Weekly Chart for the Structure and Trend:

The main idea here is that the trend is up, ODFL shares are in a clear uptrend, and price is currently challenging the underside of the (flat) 20 week EMA just under $75.00 per share.

Note how price repeatedly bounce up off the rising 20 week EMA and then lately off the 50 week EMA.

We’ll see shortly that the $75.00 level is a key pivot where a bullish “open air” trading pathway opens above it while a bearish/cautious pathway exists on a possible movement down from $75.00. Continue Reading…

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Bounce Back Bullish Market Update and Scan for April 20

Apr 20, 2015: 12:45 PM CST

And we’re back!  Back to the highs of Friday’s activity that is – and should we be surprised?

Price traded down to a key support level, formed positive divergences and power-rallied back higher this morning, almost as if nothing at all happened Friday.

This is a pattern of the current undeniable bull market that has repeated many times.

Let’s dive inside action and note key levels and the trending stocks of the bullish day:

Be sure to brush up on the “S&P 500 Range Planning” post for a broader perspective.

More divergences, more reversals off higher timeframe support or resistance levels.

Today’s session took the price back above 2,100 into the mini-range between 2,100 and 2,105.

The market remains super-bullish above 2,105 and cautious on a break back under 2,100.

Note the negative divergences that suggest a possible turn lower back under 2,100 but wait for the market to tip its hand before jumping back to the bearish side of this ongoing bull market.

Continue Reading…

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