BVF, Biovail December week two

Yesterday I plotted week one in December for the trade, as it turned out, for the week.

On the Friday the price hit the S1 point and "bounced". Given the proximity to the 50sma as resistance and the potential for a target of the 200sma and/or the Primary Pivot Point it would be worth the entry long, at least for the day. Since I have been day trading I no longer like keeping a trade overnight let alone over the weekend but I used to do this fairly regularly before, so let's go with it. This is not a commodity related stock so it is not as prone to weekend gaps like gold and oil might be.

Chart for BVF week two in December.

So, I was in on the previous Friday, held over the weekend and watched the activity after Monday.

While I have not figured a stop plan into this yet, I would likely go with something like:

"Should the price change from one PP to the next, the stop should be set to half of the distance between the PPs. This guarantees 1/2 of the first target profits as the first target is always the next PP. This is set regardless what the volatility, technical setup or other indicators might intimate, the target is the next PP and profit."

I might amend this to setting the stop to 1/2 of the move...I will consider that after seeing how the testing turns out.

Back to the chart. The red exit arrows are on Wednesday and Thursday. Seeing as the initial target was the blue PP, the price breached R1, so I would already be past the second target, exit here anywhere as profit is already achieved. Letting the winners run is not part of the plan at this point but there is no sense in just cutting them short. So, let's apply the rules for stops as they appear so far:

Monday breaches R1. Set the stop at R1 for Tuesday.
It does not get hit so move the stop to 1/2 of the move.
The R1 is $11.32, the high for Tuesday is $11.65...so stop for $11.49.

I could either set a VTSO or just go with the stops or spend some time in the morning watching the activity to determine where I might want to exit. I'll just go with the hard stops for the purpose of this testing though.

Buy $10.40 Sell $11.49 Gain $1.09 ps Return 10.5%

Jeff.