Thursday, March 04, 2010
Second Mouse Gets the Cheese
The VIXEN did a nice job of catching the big break at 10:35 and the trade was confirmed by the parabolics, the 8/8 hi/lo channel and the mid panel MAs so this was a high probability entry.
In like manner, the parabolics, 8/8 channel and 3 MAs lined up at 12:02 to signal a clean exit. This rather quick 90 minute trade yielded a respectable $.23 or 1.4%, a sizable portion of GE's current daily ATR of .34.
Reviewing the first 60 minutes of the chart is also instructive as it reveals a common VIX/price dynamic that often provides an alert for things to come. While it is easy to call that early VIX cross over and back a head fake type of move, the fact is that I've seen it hundreds of times and in about 85% of the cases it leads to the situation that unfolded at 10:30. This may be a testing of the water, so to speak, before the big move, or it may simply be the prop shops dropping the bid so they can pick up shares cheaper ahead of the bigger run up. Bottom line: my oft repeated mantra that "the second mouse gets the cheese" applies to this setup in spades.