MDA - Market Direction Analysis

[Bruce A Thompson]

Good morning Augie,

Only lost 8 cents on your first try. Not bad. I lost $.47 on my first one. You can do this. I have faith in you.

Lets analyze yesterday's action.


http://chart.bigcharts.com/bc3/intchart/frames/chart.asp?symb=mir&compidx=aaaaa%3A0&ma=0&...

Sorry about the chart, but I can't seem to make it post this morning. You may want to open it in another window.

I use the Medved streaming real time chart with Scottrade free data feed set for 1 minute candles. I also watch MACD set for 12,26,9 and also volume and OBV. I also watch the bid/ask. You can watch Island level II but it only shows the limit ECN orders. It does,however, give you an idea of the balance of the bid/ask orders.

My orders are market orders already input and with the order confirmation page up so all I have to do is push a button to confirm and it is in.

Now to the Friday's trade. As you can see from the chart the morning drop was punctuated with a fake bounce @ $2.50. Notice that the MACD did not turn. This is important as the bid/ask was still very heavy on the sell side and the bid did not increase with the bounce while the ask did. So I waited.

When the second bounce came @ $2.43 I knew it was the real bounce because the MACD turned up, the bid/ask spread closed in, and the bid jumped up to $2.48. The ask jumped to $2.49 and I pulled the trigger. I filled @ $2.50. Quick like a bunny but missed the bottom by $.06. Oh well. (g)

I was about to close out the trade @ $2.46 and again @ $2.45 for a 4 cent loss right out of the gate but the bid/ask stayed firm and it made higher lows and higher highs. I have been leaving a lot of $$ on the table this week so I grit my teeth and waited.

Around noon, the runs were loosing power. The bid/asks had topped out and I saw the beginnings of an intraday H&S pattern. At about 12:25, I pulled the trigger at the neckline and called it a day. I closed out @ $2.62 for $.12 or +4.8%. Three trades this week for +6,+12,+10 cents for a total of 11.2%

My trading philosophy with MIR is a little like Sammy Sosa cork bat and all. The difference being I only take one pitch. I either get a hit or I am out. I don't chase the stock. When I finish the days one trade I don't step up to the plate again until the next day. If I don't see the pitch I want, I don't swing at all. If I swing and miss, I am out. There is always tomorrow.

MIR has a Max Pain this month of $2.50. I am not sure what affect this will have on the price as there are less than a million shares worth of P/C contracts at that price. Even with 30 Mil shares trading yeaserday, Max Pain does have an effect on the trend. MIR brought another power plant on line in Illinois yesterday. They seem to be staying in business somehow. The drop in credit ratings will hurt but the threat of BK they are using in their refi negotiations will hurt the price more. I see the price working down to the low to mid 1's right after option expiry day. Refi negotiatons will be over by then.

After expiry day and refi negotiations, the ball game will change to the top of the next inning. The price will rise in the mornings instead of dropping and the trend will change to rising. This play will take overnight gonads (g) and longer term holding. I usually split up my working cash into swing money and trading money at that time. The swing money is for the doubles and triples and the trading money keeps on nickel and dimeing.

BWDIK (g)

BT