Here's another paper trade. I've been trying this new strategy a couple of times now, although it has generated 2 entry orders, none were triggered so far (the SCSC trade was from version 1, I'm at version 1.1 now). This is mostly because I've been entering shorts but the market has been chugging upward like a relentless train. It's not that I'm not keeping an open mind, but at this point, I haven't been able to spot a good long trade.
Here are my logic for this play.
1. We are still in a long term bear market. Although we're definitely in an intermediate up trend at the moment.
2. Vornado Realty Trust (VNO) is a real estate play. Everyone knows real estate stocks are in a severe bear trend. That's inline with the direction of this play.
3. VNO is testing the lower boundary of a congestion zone between \$50-\$60.
4. VNO's weekly indicators look bearish. And its daily ones look way overbought.
5. I am entering below its current up channel and below a support at \$49.76.
6. Reward/Risk of 7.07/1.90 = 3.72
Points 1-5 setup a favourable probability of this trade. Point 6 is the reward/risk.
Entry stop: \$49.70
Exit stop: \$51.60
The target I'm setting is a long term support from December of 2008. It is also above the 25% intermediate term upward channel established from March 2009, the bounce from its low. And it is at the 50% Fibonacci retracement level from its recent run.
Update: My entry was triggered at 9:34 a.m. I have 25 shares of VNO shorted at \$49.70 on paper now.
Update2: VNO almost touched \$52 on Friday May 8, so my position was stopped out. I will probably put on another trade as VNO came back down to below \$50 on Monday today.
[caption id="attachment_1356" align="aligncenter" width="500" caption="Vornado Realty Trust (VNO)"][/caption]
[caption id="attachment_1357" align="aligncenter" width="500" caption="Vornado Realty Trust (VNO)"][/caption]