I’ve been doing daily highlights this week of the Seeker tool in action in our Market Blog. The last two were about the Seeker in Forex on a 5-minute chart (one FX pair, and one the US Dollar Index).
Today, I wanted to back the tool out a bit and show it on a longer term timeframe, which is the daily chart. We’ll use JCOM, which is a short idea today from a breakdown perspective, but already did a lot of great work with the Seeker.
Let’s start back in August when a new Seeker upward count began. Here it is only 2 bars in so far:
Now, we achieved 9-bar status 7 days later:
The red line is thus the “Static Trendline” of the Setup count, which means that it is the lowest point during the setup phase, and it can be a “trade to target” if the stock reverses. The red line is $27.18.
Another note is that even though we got the 9, the lookback criteria for the setup phase continued for two more bars. Once that fails, the tool draws a dashed box around the whole Seeker setup, what I call “box completion”:
The concept from here is that potentially, the high of the range of the box with a Setup complete is resistance. Energy has run out. You’re looking to get short up in that area. There are a variety of methods to pick the exact entry (wait for a retest of the highs, go short if the stock breaks the low of a prior day, etc.). Any of these gets you short up in this area, and the stock continued to find resistance up there for two weeks:
Finally, it starts to rollover:
Note that in the process, a 9-bar setup to the DOWNSIDE is forming, which means that if we are short, a place to cover might be if we get the 9 bar down move, which would then suggest exhaustion to the downside:
What’s amazing and shows the precision of the tool is what happens in the next few bars. The 9 count completes, and the stock reaches down to $27.20, two cents above the red Static Trendline, before bouncing:
Talk about a “trade to target.”
