BVF.TO - Biovail Corp.

True to form I did some research...the company is called Biovail...something to do with medical stuff. Ok, enough of that, now on to the fun stuff.

Here is a chart for November through January. The horizontal lines are the pivot points plotted on the weekend of November 29th and 30th for the following first week of December.
Blue is the primary pivot point (PP)
Red are the ascending Resistance points R1, R2 and R3
Green are the descending Support points S1, S2 and S3...S1 only appears
The blue box is the trading week in question.
Click on the chart to get the clearer picture if needed.

The red arrow denotes a short position taken at the beginning of the day sometime. As the opening price was just below the R1 but crossed above it briefly then closed the day at about $11 the position would have been taken short into the morning activity as the price failed to remain above the R1. This trade would last until a target was reached or the R1 was recrossed or even approached. A small profit is better than any loss and commissions are low enough with Questrade as to be next to inconsequential...$5 per trade in my position size range so far. (they do cap them at $9.95 though).

The cover is on the Friday as the price opens below the PP and heads up. As soon as the price opens lower than the PP I think I would place a stop order just above the line to be sure to get out near the target. Now I would likely choose a VTSO at this point just in case the price actually headed down. The active price once the VTSO was set would end up just above the line as well.

Short $11.25 Cover $10.40 Gain 85 cents ps Return 7.6% (fudged against me somewhat)

Total profit for a 100 share position is only $45 after taxes and commissions which is still a 4% return on the trade for the week. This is one of the reasons that I am choosing to use the TFSA for my trading. I may still dabble with these in my margin account and just suck it up and take a tax hit...I only should pay any taxes while in a profit situation so it is not all bad, and the taxes are collected after the year is up so at least the money gets to remain in place to grow for the year.

I know this is a hindsight trade but it is basically the same method I am using live with my day trading tests and it seems to work out rather well. Of course I am always entering these trades with a particular target in mind but I have no qualms about letting the position ride for a bit if it looks like it has a very high probability of continuing in my favour.

The whole point of this little test is to demonstrate to me the validity of the pivot points over longer time frames, so even though this is a historical trade the lines were accurate.

I'll just post new charts as I get to them here.

I notice that BVF is actually very near a trade entry today as it closed within 3 cents of the current weekly R2 and seven cents of the monthly R1 as well as an upper trend boundary line a bit above that. I would be watching for a short entry tomorrow if the stock shows weakness on a 10 minute chart...but more on that another time.

Jeff.