DIG Trading Strategy – 082908

My plan for buying stocks and ETFs in the oil sector has been to wait for a pullback. I finally got that pullback yesterday. I’m aware there are hurricanes that can affect prices, but I only take my clues off the chart. Logical thinking of “well if a hurricane hits, then oil prices will go up…” does not always work.

I waited for the 60-minute chart to put in a higher high candlestick in DIG. That told me the bulls were taking a stand. At the same time, DIG was building a small base on the 5-minute chart. That gave a defined stop below the base when the ETF broke the base. I set a stop on some below the base, below the day’s low, and below the pivot low on the daily. Because I was focused on one play, I added over the 50ma on the 5-minute. Intraday profits were taken, and I held the rest, with the 50 dma target in mind.