Maintaining The Edge

December 10, 2003
Chris Tyler

I personally found the
first hour Opening Reversals difficult today. Maybe it was just me,
but instead of focusing on what wasn’t working–I opted to concentrate on the
bigger picture and fresh technical patterns with edge that miraculously appeared
as the day progressed.

I found the first couple of trades to be
difficult as there was no real follow-through in the market during the first
hour. The alerts that I posted to our subscribers quickly became indicative of
that type of price action, and a good reason for using money management–no
matter how good it looks at that particular moment.

But, as price in the Nasdaq Composite proceeded
to reverse lower, things were finally looking more conducive to some
high-probability trading, once more.

11:09:18

Intraday Setup Alert

The Nasdaq100 ETF (QQQ)
is testing a gap fill and a 78% Fibonacci retracement level. With the index
proxy off by .09 at 34.33, the extended price action on the 5-minute chart has
formed a

1,2,3 lower low reversal setup.

I quickly realized though, that at the same time,
the semiconductors were also confirming the technical picture of the broader
Nasdaq, as it was doing its own form of daily testing out of the same pattern.
My own preference is to look for triggers in the SMH, or semiconductor HOLDRs,
rather than the QQQs, if both are showing high-probability opportunities. The
reason for this is that the semiconductor sector is a more volatile instrument,
so when the pattern emerges–you will normally receive much more bang for the
buck. With that in mind the ‘confirmation’ alert went up shortly thereafter.

11:16:02

Intraday Setup Alert

The semiconductors (SMH)
has formed an extended lower low

1,2,3 on on the 5-minute chart. With the index proxy down .14 at 39.26,
today’s lows have filled a price gap and tested the lower price supports within
an existing awareness zone also comprised of two daily chart fib levels.