Mmm.. FWLT sets up again..
July 11th, 2005 by BWV
After a nice 18% + run, Foster Wheeler (FWLT), my favorite Oil Infrastucture play, is setting up once again for a low-risk entry. I caught that beautiful explosion to the upside out of the last range contraction area near 17.50.. which happened on huge volume.. Now the range is getting tighter again.. and volume drying up. I wish all of em set up this way!
I’m still long in LT accounts, with no inclination to touch that core position. Swing Trading-wise, I plan on catching the next leg up on this stock — hopefully another 15-20% move in a short period of time.
For my Swing entry, I’m already in for 1/2 of my normal position size. “Enter in Mild times, Exit in Wild times”.. For me to make this a full position (or some multiple of that), I’d really like to first see a “rinse job” of 20.56 the exact low of the last 2 days… meaning a shakeout of those traders with very tight stops. Notice that before the previous rally, there was a Reversal Day where price spiked down but recovered into the close.. in that case, the next 2 Pause days made the setup even more powerful. My entry then was after that rinse day.. and usually only 1 of those is “required.”
If we spike down below 20.56, and then recover back up thru that price.. that’s when I pounce.. using the newly established low as my stop-loss level. Then, I probably make it a 150% or possibly double-sized position on an upside break of $21. If we never get the stops at 20.56 rinsed, I simply buy any move up thru $21 — but with less confidence than if there were a rinse of those tight stops.
It aint gonna stay between $20.56 and $21 forever. And all signs point toward continuation of the existing trend, not a reversal.
