***Editor’s note: Jake Huska is a college student working on his trading game. At SMB we believe traders should start working on their trading game early, just like pro athletes. Jake’s posts reflect a better journey toward becoming a pro trader for the college student with a passion for trading.***

As a trader I am more concerned with price patterns and how they apply to different stocks as opposed to falling victim to the financial media’s scripted “warnings” of an impending market crash. There’s no accountability of making such bold market predictions, but I digress. While it’s important to know what kind of stock you’re trading and how the stock tends to move (momentum/growth stocks vs large cap stocks), human emotions such as greed and fear are universal and are not only expressed in a stock’s price pattern but the price patterns of all asset classes.

Two stocks that recently exhibited very similar intraday price patterns were Anadarko Petroleum (APC) and Restoration Hardware (RH). Both stocks were gapping down on above-average volume and therefore were In Play. Despite their initial gap down in the post market, both stocks had an opening move higher and showed signs of bouncing intraday. Following their initial move higher on the open, both stocks consolidated and then moved higher off of these levels. Later in the day, they each pulled back to their early morning consolidation levels and offered low risk entries to catch a second up leg. Buyers stepped up again, and both stocks closed at their highs.

Five-minute intraday chart of APC (12/13/13):

Five-minute intraday chart of RH (12/13/13):

I don’t make predictions. I find high probability setups with low risk and potentially high reward, and I execute. Perhaps this is an oversimplified explanation of my trading style, but I want to emphasize my belief that paying attention to a stock’s price action and the many price patterns that are seen in the market is a more viable strategy than turning on the television and being struck with fear about the “looming market crash.”

Thank you for reading. Please let me know if you have any questions or comments.

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Twitter: @MarketPicker
Jake Huska

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