STZ: Bull Flag Separating Two Measured Up Legs

Michelle B submits:

STZ, on Thursday, April 5, released estimate-beating earnings. I noticed STZ during my premarket news reading, and once the market opened, via the top NYSE gainers scan and its notable movement on the high ticker. It gapped up, filled in the gap, and then made new intra highs within the first thirty minutes. This is very bullish action showing eager buyers and caught my attention, so I put the one-minute chart on my trading platform's main page anticipating a bull flag consolidation and a second leg up. In other words, I was shown strength and was expecting that the strength would cause a continuation of the uptrend intraday.

The one-minute time frame was chosen because I needed to see the most detail possible to gauge the best entry and exit as my focus is to anticipate the breakout by entering at significant intraday support and exiting at the target price as close as possible. Entering at significant support allows a nice lot size because the risk is so small, as the stop loss is right under that support. Based on a measured move and the daily 50 sma resistance at 22 my original target was 21.90.

However, as is my wont, I checked out other time frames throughout the trade---the thirty-minute showed the consolidation clearly as a triangle which confirmed my plan of playing a possible second leg up from a consolidation pattern. In contrast, the daily showed in general a very weak chart.

In addition, I was cautious because of Thursday being a day before a market-closure holiday and because STZ showed by its candles and ticker information that it can trade abruptly with sharp moves and its bid/ask spread can widen suddenly. Because of the anticipated low volume expected in the afternoon, I put a time limit on this trade before I even entered it, which was by 1 PM I would want to have closed the trade.

Note in the above chart that the second leg was shorter than the first---not all measured moves are exactly equivalent. STZ reached 21.73, about .17 away from my target. When 2 bearish candles printed on the one minute (see chart below), I quickly decided not to wait for my price target. In addition my time target was running out also so I booked my profit shortly after. Here is a close up taken from the above one-minute chart of STZ:

The daily time frame for STZ showed a weak chart pricewise: price is far from a new 52 week high. This aspect cautioned me regarding the bullishness I was seeing intraday.

In summary, entry was at 21.43, exit at 21.63, a mental stop loss at around 21.33. So a 2R trading lasting approximately 60 minutes.

Using an intentional-training/solution focus as Brett Steenbarger encourages, the V-shaped breakout of the bull flag impressed me so much that I was too hasty in entering and got in about .08 higher than necessary and had to wait thirty minutes before STZ broke out to start the second leg up. If I had waited to get in closer to price level support, I would have been able to buy a bigger lot size since my risk would have been reduced, resulting in a larger total profit amount. Also I would have cut the time I was in the trade by half, a very important aspect for my precision-oriented but paradoxically impatient self.