Tuesday, April 21, 2009

A Simple Lesson

Above and below: 2 minute bars of Monday's Qs and the NYAD.....
Monday's trend down day provides a classic example of why it's important to closely monitor the NYAD in real time in conjunction with price charts.
Many traders were looking for reversals off S2, S3 and S4 levels as prices continued to crumble throughout the day... and there were several occasions when it looked like pops in the TICK and TICK volume were going to signal some midday recovery.
Those that followed the NYAD, however, were not misled by these little feigns and head fakes as market makers tried to draw in buyers. With the NYAD refusing to budge above .12 even in the face of otherwise apparent rallies, and in fact spending most of the afternoon at .10 or below, there were few odds favoring an afternoon reversal.
As I have mentioned MANY times before, I regard the NYAD as one of the most important indicators in my daytrading toolbox and yesterday showed why.

2 comments:

fiki said...

bzb,
I´m finding your nyad interesting but can´t find much info concerning it.
is this the nyse advc/decn and do you look at the slope or also some absolute numbers like 1 is bullish and 0,33 is bearish?
I actually made a 8ema/16ema script for tos that marks the crossing with a dot on the chart and find it very helpfull

bzbtrader said...

Fiki,
I suggest you go over to the right side of the blog under HOW I TRADE and look at the 816 NYAD and GE and NYAD SCALPS to see examples of how I use the NYAD. It's almost exclusively a daytrading tool (for me)although sometimes looking at the 60 minute bars can help see larger swing trading setups.