These 3 stocks may offer good setups

Editor's note: This article was written by Mike Kestler on Friday afternoon and is intended to apply to Monday's market.

Today marked the end of the 3rd quarter for most companies. Also the mutual funds and hedge funds will do their quarterly accounting at the close today.

Even with this fact, it seemed like I was trading in the middle of summer. The indexes had no real range and the stock prices were moving at a slow pace. Even in this environment, there were some good trades using a 52-week high and high of day scan as well as the new reader. Some of the stocks I took advantage of were Advanced Micro Devices (AMD | Quote | Chart | News | PowerRating), Micron Technologies (MU | Quote | Chart | News | PowerRating), and Delphi (DPH | Quote | Chart | News | PowerRating).

AMD has been grinding up for the last few days ever since it broke the previous 52-week high of $24.00. Once it came up on my scanner at a new high, and I had enough confirmation to go long, I entered the trade. In today's slow, grind higher market, I soon realized that a .10 stop was not sufficient. I had to widen my stop to .20 cents. Otherwise the Specialist dropped his bid, took out my stop and then brought the price right back up to 10 cents higher than the initial entry price. I was first long at 25 and then got stopped out at 24.95. I then placed a stop to buy AMD at 25 if it was to return to the day high. I got filled at 25.10 this time and place a protective stop at 24.90. Once I realized that there was a large buyer in AMD and I did not get shook out, I was adding to my position at 25.25 and 25.50. I eventually got stopped out on a trailing stop at 25.60 after it reached a day high of 25.75.

I traded MU in a much similar manner. MU opened .80 cents higher on positive news and earnings. Due to the strong number in MU, I was looking for the opportunity to go long. MU’s initial move was to the downside because it opened up at 12.99 and sold off to 12.77. I realized that there was a large offer in the NYSE openbook at $13.00. I placed a stop to go long MU at 13 because if MU traded through this point of resistance I felt that it would test the 52-week high set on September 14th of 13.29. I went long at 13 and placed a .10 protective stop. I decide to wait to add in to this position until 13.30. I wanted to add to my position if MU broke its 52 week high. Anyways MU traded up to 13.47. I was ready to add to my position at 13.50 but never got the opportunity to go long there since I was stopped out at 13.40. MU fizzled out for the rest of the day and ended up closing at 13.30.

A stock that came up over my news reader that I was able to take advantage of on a very slow day was DPH. It came over my news reader that DPH was moving steadily up. That was an understatement. DPH was being crossed up from 2.65 all the way up to 2.80. I was able to go long and take quick profits in DPH all the way to 3.25. If you look at the chart, you can see how active DPH was for 15 minutes during what turned out to be a pretty slow day.

If the market continues to hold strong I will look for that entry point in MU through 13.50. You can also look for MU to sell off and fill in some of today’s gap if we get a weak market. Other stocks to look for some activity in are (AGP | Quote | Chart | News | PowerRating), (DNA | Quote | Chart | News | PowerRating), as well as DPH.

Mike Kestler

Pease e-mail with any questions you might have at mkestler@evotrading.com

Michael Kestler is a full-time professional trader and managing partner for Evolution Capital LLC., a proprietary trading firm. Mr. Kestler specializes in intraday trading of NYSE listed stocks. Before founding Evolution Capital LLC., Michael began his career on the floor of the CBOE. Mr. Kestler was previously a Mid-Cap and Nasdaq Market Maker. www.evotrading.com