Real-Time Comments on HAIN

(Breakout of High after Shallow Pullback)

11/10/00  <Chris>   09:24:46 HAIN, METG, PHSY for me at the open. METG low volume, just watching
11/10/00  <Chris>   09:30:35 watching HAIN would like selling under 21 1/2
11/10/00  <Chris>   09:34:13 don't buy HAIN over 5/16..
11/10/00  <Chris>   09:34:30 if it comes lower here, wait for test of low 21
11/10/00  <Chris>  Consider Buying: HAIN  22, stop at 21 5/8
11/10/00  <Chris>   09:43:48 would like a move to at least 22 1/2
11/10/00  <Chris>   09:44:28 scalpers exit 22 3/8 to 22 1/2
11/10/00  <Chris>   09:46:16 let's see if 22 can hold..if not, we could very easily see test of 5/8 again.
11/10/00  <Chris>   09:46:25 On this stock, do not wait for selling at stop price
11/10/00  <Chris>   09:46:36 or you won't get out at that price
11/10/00  <Chris>   09:46:49 22 holding
11/10/00  <Chris>   09:46:55 scalpers could be out here
11/10/00  <Chris>   09:47:02 holders raise stop to breakeven
11/10/00  <Chris>   09:47:17 any price spike over 22 1/2 and exit 1/2 shares
11/10/00  <Chris>   09:47:36 22 3/4 would be okay for 1/2 shares here
11/10/00  <Chris>   09:47:56 stop on rest is breakeven
11/10/00  <Chris>   09:48:05 let's see if we can ride it a bit on remaining shares
11/10/00  <Chris>   09:50:49 if we can get over 23 1/2 on HAIN, look to exit remaining shares
11/10/00  <Chris>   09:51:04 keep stop at breakeven on rest if you wish to ride it longer
11/10/00  <Chris>   09:51:18 raise stop to 22 1/2 if you wish to lock in profits
11/10/00  <Chris>   09:52:53 exiting at 23 1/4 on remaining shares is okay for holders...if you wish to hold longer for over 23 1/2, raise stop to 22 1/2
11/10/00  <Chris>   09:53:42 offer out at 23 3/4 to 24 now on remaining shares everyone
11/10/00  <Chris>   09:53:55 if no hit, we have raised stop to at least 22 1/2
11/10/00  <Chris>   09:54:48 take 23 11/16 or better on HAIN now
11/10/00  <Chris>   09:54:52 and forget about it
11/10/00  <Chris>   09:55:13 going to have to hit ECNs
11/10/00  <Chris>   09:55:16 ISLD at 3/8 now
11/10/00  <Chris>   09:58:14 HAIN at 22 1/2 for any remaining holders

Training Session Explaining Real-Time Comments

11/13/00  <Chris>  Today let's go over HAIN from Friday.
11/13/00  <Chris>  Please bring up HAIN chart from the website at:
11/13/00  <Chris>  www.realitytrader.com/calls/hain.htm
11/13/00  <Chris>  First thing we see on the chart is the move from the open to 21 on relatively stable volume.
11/13/00  <Chris>  The fourth volume bar shows a slight increase in volume as paced increased off the 21 level.
11/13/00  <Chris>  At this point, traders could have tried an entry when they bid strength and interest coming into the stock, with a stop no worse than selling at 21.
11/13/00  <Chris>  As you see in my comments, I said to buy it no higher than 21 5/16 on this action.
11/13/00  <Chris>  However, to be fair, I missed this action off the 21 level and 5/16 was not possible.
11/13/00  <Chris>  21 3/8 to 7/16 was more possible.
11/13/00  <Chris>  And to me, taking the trade 3/8 to 7/16 off the bottom was too far for a reasonable entry price.
11/13/00  <Chris>  I would consider this to be chasing.
11/13/00  <Chris>  Even 5/16 is stretching it...the closer to best entry, the better.
11/13/00  <Chris>  We went over money management principles earlier last month.
11/13/00  <Chris>  Stating how many shares or how many points away from best entry you could enter.
11/13/00  <Chris>  Please review this class to understand what is being said.
11/13/00  <Chris>  In this case, 21 1/4 or better was optimal for me to not consider it chasing.
11/13/00  <Chris>  The next few volume bars show a volume spike.
11/13/00  <Chris>  Coupled with this is a move to 22.
11/13/00  <Chris>  According to Principle #6 of our workbook.
11/13/00  <Chris>  6. An acceleration in the price advancing, almost vertical movement, is usually not sustained and indicates the end of this stage of the move (euphoric stage).
11/13/00  <Chris>  Coupling a rise in price with a volume spike, this is where majority of traders entering off the 21 level would be exiting.
11/13/00  <Chris>  Further, this 22 level, as you can see on the chart, serves as new resistance.
11/13/00  <Chris>  The pullback from the 22 area came to a level of 21 5/8.
11/13/00  <Chris>  This pullback from 22 to 21 5/8 serves as our mini range.
11/13/00  <Chris>  You can see the mini range defined by the two red lines.
11/13/00  <Chris>  There is two options in this case:
11/13/00  <Chris>  1. Buy the low of the pullback of the mini range, in this case, no higher than 21 11/16 with stop at 21 5/8.
11/13/00  <Chris>  In this case, you have the choice to either scalp within the range of 21 5/8 to 22 or hold for breakout of the high.
11/13/00  <Chris>  2. Watch for the test of the high and on the look of a break, buy the breakout at 22.
11/13/00  <Chris>  Most of this ""look"" comes in the form of strength in the bid, ask getting smaller and pace increase.
11/13/00  <Chris>  You can see on the volume chart that pace was increasing into the break.
11/13/00  <Chris>  At the moment of the alert to buy it at 22, the stock included these aspects..strong bid, ask disappearing, pace increase.
11/13/00  <Chris>  For those that bought the breakout play.
11/13/00  <Chris>  We see on the next volume bar another volume spike.
11/13/00  <Chris>  On breakout plays for scalpers, those that take faster profits on larger shares, volume spikes should be considered as a good reason to exit.
11/13/00  <Chris>  The black circle on this chart from the 22 3/8 are represents the price strenght coupled with the volume spike.
11/13/00  <Chris>  And a good exit strategy setup for these traders.
11/13/00  <Chris>  For those that wished to hold for a continued uptrend. They have the choice to take 1/2 shares at the scalpers target and up the trailign stop to breakeven.
11/13/00  <Chris>  In this chart, we do see a bar that dips lower to under 21 1/2 again.
11/13/00  <Chris>  But this wasn't the case in reality.
11/13/00  <Chris>  Many times, tick charts have these extended bars due to unrelated activity.
11/13/00  <Chris>  Possibly due to out of bounds trade would be one reason the chart could be represented incorrectly.
11/13/00  <Chris>  As stock pulled back from the scalpers area, it held the 22 area.
11/13/00  <Chris>  This is a very tough spot for traders.
11/13/00  <Chris>  In this example, the trader that bought the breakout of 22 now has a few things running through his head.
11/13/00  <Chris>  1. Trade was 3/8 to 1/2 point positive and now testing my buy price. Do I hold it with stop at 21 5/8 or exit at selling at 22.
11/13/00  <Chris>  If I exit at 22 and it holds, I will be frustrated for not holding it.
11/13/00  <Chris>  If I exit at 21 5/8 by not trailing my stop, I will be frustrated for turning a 3/8 to 1/2 point gain into a 3/8 point loss.
11/13/00  <Chris>  In this case, the trader must get rid of such thoughts at this point in time.
11/13/00  <Chris>  Instead, in this case, you decide as the stock is climbing your exit strategy.
11/13/00  <Chris>  Okay, stock is positive, I'm either goign to keep stop at 21 5/8 or trail it to breakeven. I don't want to take a 3/8 loss on failed breakout. I'd rather take the flat trade.
11/13/00  <Chris>  Maybe I'll use 21 15/16 so that if 22 fails, I take a small loss but my break of 22 stop was confirmed.
11/13/00  <Chris>  Etc.
11/13/00  <Chris>  The idea is this:
11/13/00  <Chris>  In such a case, the trader has to have the exit strategy firm in his trade as the stock moves.
11/13/00  <Chris>  This lets you focus on the stock activity as it moves.
11/13/00  <Chris>  Cluttering your mind with external thoughts of profit and loss in the trade, does not allow for clear thinking and ability of tape reading.
11/13/00  <Chris>  The less you are focused on the action itself, the more your emotions control the trade.
11/13/00  <Chris>  A successful trader must keep self-control at all times.
11/13/00  <Chris>  Define your strategy in this case, and execute it when the time comes. No external thinking is required.
11/13/00  <Chris>  Fortunately in this case, 22 held.
11/13/00  <Chris>  At this point, 22 serves as our support as the resistance of 22 now changed to support.
11/13/00  <Chris>  For me, from this point on, any selling at 22 and I'd exit the trade.
11/13/00  <Chris>  Next with 22 as our stop
11/13/00  <Chris>  we want a move to over 22 1/2 to occur.
11/13/00  <Chris>  In this chart, we again see a volume increase as well as the break of 22 1/2.
11/13/00  <Chris>  At this moment, holders of the stock begin to look to exit at least 1/2 their shares above the 22 1/2 level into strength.
11/13/00  <Chris>  This is mostly easily done with an ECN order at some point on the ask
11/13/00  <Chris>  Let buyers come in and take your offer.
11/13/00  <Chris>  ISLD, ARCA, REDI, etc.
11/13/00  <Chris>  We suggested 22 3/4 with this idea to sell into strength on price increase and volume increase.
11/13/00  <Chris>  So you enter in an ECN order at 22 3/4 and let the traders take your order.
11/13/00  <Chris>  Also at this point, taking your full position is fine.
11/13/00  <Chris>  I have no problem with taking a full position exit for traders that are trying to rebuild confidence, take surest profits, developing right exit strategies, etc.
11/13/00  <Chris>  No way we could have known the stock was going to climb to 27 later that day.
11/13/00  <Chris>  For those that have some room to trade remaining shares, we wanted to see if we could ride a reversal trend after the gap down on HAIN.
11/13/00  <Chris>  In this case, a trader has two choices.
11/13/00  <Chris>  Keep stop at breakeven or trail it wider
11/13/00  <Chris>  Later in the trade, we trail the stop to 22 1/2 as we broke over 23.
11/13/00  <Chris>  Now the next few volume bars from the point at which we took 1/2 shares begins to fade.
11/13/00  <Chris>  If you look at Priniciple #2 in the workbook:
11/13/00  <Chris>  . Slowing pace of buying with decreasing volume indicates that the top of this stage of movement is near.
11/13/00  <Chris>  In this case we wanted to now look for a price to exit remaining shares.
11/13/00  <Chris>  As we moved over the 23 1/2 level, buying dried up considerably.
11/13/00  <Chris>  So much so that we saw it harder to exit into strength if you waited for the pause to confirm that the uptrend was ending.
11/13/00  <Chris>  When we alerted the exit at 23 11/16 on remaining shares here is what happened.
11/13/00  <Chris>  The bid was considerably weaker on the pause...small sizes, not much participation by ECNs or MMs.
11/13/00  <Chris>  We saw a drop in the bid to 1/2 and then 3/8 within minutes.
11/13/00  <Chris>  If you waited to try and hit 23 11/16 bid, you would have had that order rejected or unfilled depending on your order
11/13/00  <Chris>  and had to immediately hit ISLD at 3/8
11/13/00  <Chris>  costing you nearly 3/8 in loss
11/13/00  <Chris>  by not selling into strength over the 23 1/2 area.
11/13/00  <Chris>  no loss, but missed profits.
11/13/00  <Chris>  Lesson is:
11/13/00  <Chris>  If you see the stock advancing on slow buying
11/13/00  <Chris>  get ready to exit. If buying is slowing, exiting after confirmation of the top is more difficult.
11/13/00  <Chris>  For those that wished to hold longer were stopped out later at 22 1/2 on the trailed stop.
11/13/00  <Chris>  This is represented by the blue circle.
11/13/00  <Chris>  As we discussed, later in the day the stock hit highs in the 27's or so.
11/13/00  <Chris>  However, if you begin to look at the chart for the entire day, notice the volume bars throughout.
11/13/00  <Chris>  They are in spurts of energy that are good for scalps only from risk and readability point of view.
11/13/00  <Chris>  Holding that stock throughout the day would have been considerably more difficult on the type of action we saw after the pullback to the 22 1/2 level.
11/13/00  <Chris>  We used our tape reading principles to both enter and exit the stock with reasonable profits, not optimal obviously as it hit near 27s, but reasonable.