Friday, February 25, 2011

Channel Trading - CPST

Trading is often simple in hindsight. Its usually simple premises that create the most value - anything that has many layers of complication for the reason to buy a stock can sometimes debilitate a trader. Add that to the over-abundance of trading vehicles and leveraged abilities enticing your account every moment and keeping things simple can be hard.

Channel trading is simple. Buy at a price(level) you have seen hold its ground before and sell at a price(level) that you have seen fail before.

A simple trading idea and identification process.

CPST - Capstone Turbine Corporation - you may want to be strategic in entry here as we may get a short term correction as you can see in the chart. The ADX is spread far apart so we need some consolidation. The only other risk is if we see a little mania breadth and the stock keeps running as oil climbs. Use a pullback as a buying opportunity.

Good luck!

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