Thursday, May 27, 2010

Down but not out!

The markets have been tricky over the past few days but I only have myself to blame for taking a big hit. Since no matter what the markets do I have control over my position size, entries and exits and should know and be comfortable with how much I will stand to lose if the trade does not pan out for what ever reason. None the less, I am still convinced that the markets currently present a low risk opportunity for intermediate term trades and there is one on my radar for a possible entry today.

The company is Gentium S.p.A. This stock broke out of a stage 1 basing pattern on massive volume in April. It has pulled back on very low volume to support ($4.00) and presents what I believe to be a low risk speculative buy opportunity. Please note that this is not an institutional quality stock and more of a speculative buy especially when you also consider that it is a pharmaceutical stock which I generally stay away from. This purchase is based purely on technicals and consequently my position will be small.

Here is the chart and my plan below:

I plan to enter above $4.50 the previous week's high with a stop loss a few cents below the $4.00 support level. My target is around $6.00 just above previous high. If however, GENT hits the target within the next two weeks I will try to hold out for possible larger gains.

Good luck and good trading!

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