Trade Review: DXD, FSLR, DEXO

A bad week for me. I closed three trades, all of them negative.

The first trade was DXD long, which is a double inverse DJIA ETF. After market broke down from bearish flag I anticipated SPX would come down to at least 1175, where I would look to cover. But market reversed the next day, so I had to take a loss on this one. Meanwhile I opened some long trades and I expected shorting a market would be a good hedge if indices go down.


Here is how the actual trade took place:


My next trade was FSLR. This stock made a pattern that I call a "Bounce". A Bounce is basically short term bottoming pattern. After some sort of a shakeout stock bounces off lows, creates a very brief consolidation area and then breaks out, rallying for 1 to 3 days on a short squeeze.
I bought abreakout above 33.30 resistance area and thought FSLR will easily reach previus gap down resistance at 37.


And stock is actually still poised to go there. But as seen from the intraday chart below (for intraday charts I have to use my trading platform) I got shaken out on a wild swing down as I raised my stop. Now, there's not really that much more I could say about this trade as a bad luck. My entry was a little bit late and my stop was probably too tight but the stock simply collapsed after it touched 36 mark. I definitely should've bought earlier, but I would still get shaken out on that ugly drop. So the lessons from this one are don't chase breakouts and have a buffer for stop loss. Which I did have, but not enough.


The last trade is DEXO, which is an intraday copy of FSLR. But DEXO was a really bad trade. I'll explain why.

I have a pattern which I call a "Launch". Every once in a while I find a stock in a solid downtrend, suddenly shooting up from the ground, like a rocket ship from the launch pad. Often Launch pattern develops in several stages. As seen from the daily chart below, DEXO was in its fourth consolidation phase from its absolute low in October and stock was alreaady up 500% since then. I've been watchnig this stock during this last consolidation and firmly believed it can make another move up. But this was flawed thinking. Fourth stage bases are way too obvious to everyone. Also, DEXO experienced a significant climax top on November 29, when price gapped up and was falling all day long on huge volume. The third problem is that this is clearly a pumped up stock. There are many traders shorting it on every rally. So, all in all, I made plenty of mistakes with this one.


An intraday chart revealy pretty much the same picture as FSLR. I bought the breakout above intraday resistance and immediately price crashed, hitting my stop.



And finally, the biggest mistake I made the last week was trading momentum stocks into the holidays. Experience tells that days before holidays tend to be dull low volume days. Of course, market may day drift higher all the way to the year end, but we cannot expect any serious momentum develop. If I find any good setups to trade I'll probably have to use wider stops than I used to.