OK, this is the last post on this setup.
I'm teaching a trading class in the afternoons this week, and this setup has been a focus of our attention, so I thought I'll get double duty from the post and link it to the blog.
Right out of the gate the Qs drop and look like the PP is coming up fast.
But then, by 9:34 we've got a little bullish soggy bottom formation (discussed last week) and the parabolics fire a BUY at 9:35.
Now this is pretty early in our 9:38 - 9:48 magic circle, so I've got some hesitation about jumping in at this point.
But then I look at the Qs technicals and the MACDs and MAs are all upslope and the NYAD is upslope along with its MAs and MACDs.
The NYAD parabolics are divergent but, as has been noted in the previous 2 posts, we disregard the NYAD parabolics for the first 30 minutes so the total net signal is strongly bullish.
We enter at 9:35 at 36.17 and I'm ready to cover at the first sign of a head fake.
That's exactly what looks like might be happening as a 9:39 - 9:40 dip develops.
But the NAYD is still chugging upstream and the Qs parabolics are still bullish. This type of 2 or 3 bar liquidity building fade is always a challenge for me, as one never knows if this is a start of a reversal or just a pause. I have a stop in place at 36.15 so I'm ready for whatever happens here.
As luck would have it, it turns out to be just a one bar fade and the Qs surge on up for the next 5 minutes before fading off again. I'm expecting this surge to run to R1 (36.67), which would make one great trade, but I'm also thinking "today is Friday and Friday's tend to be neutral to negative over 70% of the time", so I not wildly optimistic.
At 9:48 the Qs parabolics flash a SELL (cover).
The NYAD has started to flatten out and the Qs technicals are neutral to negative so, with a bit of hesitation again, I cover the trade.
Net time in trade: 9:35 - 9:48 = 13 minutes
Net trade gain: 36.17 - 36.35 = $ .18
Better than .01 a minute but a REALLY short term trade. Nevertheless, the signals were there and I followed my plan so I've no regrets.
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