When you define market conditions to be range bound, it’s good to establish price levels, often called goalposts, which define the range you’re envisioning. The idea here isn’t to predict the future but to hone in your observation and interpretation of market behavior at these reference points to gauge sentiment and conviction (or lack thereof).
I opined what I thought were my range posts back on June 8th and I still am using the same vision while positioning myself. We’re now reaching the upper bracket of the range in the SPY, but my favorite high spec mobile company, Pandora, is bouncing off bracket low. Although we may see another downside rotation through our range on the indices, I used today’s big push as support to size into Pandora.
The daily chart of Pandora has chugged through a range since blasting off the $8.50 base during pre-FB-IPO days. Since then it has churned $10-$12. And in my view, market participants are accepting a higher value in the price of Pandora stock, and the next move will be price discovery to the upside. Thus, when I saw price sitting on the bracket low yesterday, I put my tester piece back on. If you’re going to play the bracket, you must commit. This morning, it looked strong so boom, I ratchet up to a 12% position.
Unless it charges $12 like an angry bull, the plan is to take a 1/3 scale if we approach $12 from below. Otherwise I will press, but look to scale a piece during that trading session. The remaining position will be under close scrutiny for another round robin down. Below $10.00 we could see a cascade of bone crushing sell stops. I want to avoid that mess.
Trading brackets, SIMPLE, but never easy. Commit baby.Comments »