Wednesday, June 24, 2009

Fade to Black

This morning's early pop sure looked like a possible fade candidate as the 9:38-9:48 magic circle played out. What was different about today, and what should have waved you off a fade was the sudden upsurge at 9:49 accompanied by a parabolic BUY on the Qs.
At this point the NYAD parabolics were on a solid BUY, but as I've mentioned before, the first 30 minutes of the NYAD parabolics are often essentially useless due to the skewed carryover from the previous day's momentum.
At 9:50 the NYAD 3/7 MAs execute a bullish cross and at 9:51 the Qs execute a 7/14 MA bullish cross, so we now have 4 signals bullish. The fact that R2 is only .15 above supports the odds for a quick trip to that resistance level and within 7 minutes R2 has been hit. We get a little reversal in the parabolics at 10:00 but the MAs have NOT crossed on either the NYAD or the Qs so odds favor holding at this point.
Sure enough, at 10:07 the Qs break through R2 with gusto and the NYAD flashes a large bar UP.
next target R3.
As the VXN and the Qs continue to diverge the odds of hitting that R3 target (35.75) look more and more reasonable.
With the market in a continuing upward momentum, R3 gets hit at 10:20. . .a very fast move.
And, while I'd like to stick around to see how far this thing will run, I've got some clients to meet in an hour and decide to cover the trade.
Net time in trade: 9:52 - 10:21 = 29 minutes
Net trade gain: 35.45 - 35.74 = $ .29
So, a penny a minute. . . my typical goal for these types of trades but seldom executed as cleanly as this trade.

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