Wednesday, October 07, 2009

NYAD Reverse

Just a quick note on yesterday's NYAD dynamics. Shown on 10 minute bars, the NYAD momentum over the past 2 days is clearly evident. Where it gets interesting is just before noon when all our technical align to the downside on both the Qs price chart and the NYAD. With a SELL confirmation of the parabolics on the NYAD, this is a high probability short. Also of interest, and reflective the relative over bought levels, R1 on the NYAD yesterday was at 7, a number normally associated with an R4-R6 reading.

Finally, a little digression today before resuming my extensive study of Qs pairing opportunities. I've mentioned this free e-magazine before and, despite the name, it's not only for futures and options traders, but stock traders as well who may creatively apply some of the featured concepts, indicators and systems to the equities markets.
Download the current edition and/or sign up for a free subscription.
The article that caught my attention this month was the double butterfly setup (pages 20-21) that has shown itself to be consistently profitable for the last 5 years (the period backtested).
This particular setup uses calls (net credit spread) whereas I have previously noted double butterfly setups using puts (net debit spread), which is just my preference.
Contrary to normal expectations to let the position ride into expiration, the F&O model exits after only 11-14 days. Yet, this simple approach and aggressive risk management program yields an 81% win/loss ratio and a 154% return.
Worth a look IMHO and did I mention . . . it's free.
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