Tuesday, December 23, 2008

GE Rules

Another relatively easy GE/NYAD scrap (I'm not going to call them scalps anymore) today.
I've also shown the NYAD in a separate chart box below the main GE/NYAD chart just to show the relative dynamics of the NYAD.
GE had almost identical volume as the Qs and IWM today 65M, demonstrating it's popularity. I hope none of you guys are telling your buddies about these trades. If you do, this little mean reversion trade is going to fade away faster than Madoff's billions.
The entry SELL trigger was picture perfect at 13:00, with GE having diverged against the NYAD for the previous 50 minutes.
The parabolics got us in dead on 13:00, the 8/16 fired a confirmation at 13:14. Now, after 23 years of trading there are a few things I know. . one of which is that skewed volatility pops up in pre -holiday, thinly traded markets. This is where following the NYAD as the true pulse of the market pays off and encouraged me to double my original 13:00 position at 13:14 when the 8/16 crossed.
My optimistic goal at this point was a retreat to the PP pivot, which would have taken GE down to 16.15. But, alas, this was not to be.
At 14:00 the NYAD shows some strength, although the lower NYAD chart shows what a wimpy little surge that was.
NEVERTHELESS, being the nervous nelly that I tend to be, I close half the position at 14:10 and am considering closing the rest when the NYAD does a plunge at 14:30 and GE follows suit.
Once again I'm looking at the PP pivot as the next downside target, but GE's failure to breakthrough 16.21 on multiple attempts tells me that the path of least resistance is the close out, which I do, with some luck at 15:06 on a kiss-off bar at 16.25.
Time in trade: 13:00 - 14:10 = 70 minutes and 13:14 -15:06 = 112 minutes (way too long)
Trade gain: 16.48 - 16.33 = .15 and 16.43 - 16.24 = .19
Net gain = .34
Another subpar trade, but I'm glad I doubled up with the 8/16 cross as it made the trade worthwhile.


klynn55 said...

Bz: why no buy at 12:18, divergence,crossover, and sars all there. thanks

bzbtrader said...

That's a good question. Unfortunately, everything looks really clear in highsight, but going into these divergent trades you never know how far they're going to run. That's why I let the divergent side play out and then ride the mean reversion side.
The trick is deciding exactly what your game plan and triggers are:
If GE/NYAD divergences, then the setup as shown works 100% of the time (so far).
IF SARS and 8/16 crosses, then a different set of risk management parameters come into play (for me).
That being said, I always use the NYAD and/or TICK as a prime confimration tool.

Cucca said...

I'm actually trying to figure out how to get into GE, with one of my LEAPS, sigh, maybe one of these days.