Stock Trading HIHO - Highway Holdings Ltd

It seems the trading patterns that worked in 2006 are still working in 2007. That’s good for me, and anyone else who watches a few trading patterns, and plays them repeatedly. HIHO - Highway Holdings Ltd. offered a chance to buy on the first pullback today.

A trading buddy mentioned this stock to me when it was in the 6’s, so it went on my radar. I haven’t talked about stock retracement much, but it is a factor to watch when trading. You’ll see the powerful move HIHO made this morning after the open. With as large a percentage move as that, I like to watch a larger time frame. It’s too easy getting cut up in smaller time frames with these type of whipsaw stocks.

The 15-minute chart put in a buy signal with the stock retracing about 50% of it’s first thrust. It’s preferable to have a retracement of 50% or less, as it shows the bulls still have strength, and have the buying power to take the security higher. A stop is placed under the pivot low, and a target set near the high of the day.

Check out the weekly chart. Would you want to hold HIHO any longer than you have to? Holding too long may have you singing, HIHO, HIHO, it’s off to the poor man’s trail we go. Anyway, good to see Highway Holdings play out as planned. Note that this pattern works best on the first bounce (more example trades of this trading pattern).

Also, notice on the 15-minute candlestick chart how the stock retraced again after touching the day high. It pulled back about 100%, to the pivot where the stop was placed. Bulls are losing their power. I would not buy the second signal in this case. Supply and demand.