Wednesday, May 20, 2009

Tracking the Qs/NYAD

Here's another example from Tuesday's action of how tracking the NYAD in conjunction with the Qs can provide confirmation for trading signals and avoid premature entries and exits.
For today's study I've ratcheted the charts down to 1 minute bars, although 2 and 3 minute yield similar visual results.
One important item that I've mentioned before: Never try and follow the parabolics on the NYAD open for at least 30 minutes. Regardless of the close-open price differential on underlying stocks/ETFs, the NYAD's close-open differential will be wildly skewed about 80% of the time and you're just asking for trouble trying to read anything from that signal.
I've shown a couple confirmed NYAD/Qs entries: one 20 minutes before Monday's close and one just before 10:00 on Tuesday and one confirmed SHORT/COVER at 10:45.
Note the behavior of the underlying technicals and the action of the VIX on the NYAD and the VXN on the Qs.
And note how the parabolics gave concurrent BUY and SELL signals on these 3 occasions.
And this is why I ALWAYS watch the NYAD.

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