Here’s a simple intraday setup in PIXR
Editor’s note: Please welcome Jea Yu who is
joining us today for the first time. In his commentaries, Jea will discuss
current market conditions and, using his proprietary strategy, alert you of
potential intraday setups in individual stocks.
Intro to the Mini Pup Breakout Trigger
Hi everyone. My name is Jea Yu (Jay). I have been
involved with the equities markets for over 10 years since its 1998 inception. I specialize
mostly with intraday trading with the U.S. equities and futures markets. The
basis of my methods involve a specialized and unique use of stochastics and
moving averages in converging time frames.
The name of the game is to find the transparency in the markets before it
becomes too transparent. That is the bottom line in trading. In order to even
consider trading a stock, you have to have some tools that are going to show you
support/resistance, trend and momentum. I utilize the 5 and 15 period simple
moving averages for trend and support/resistance and the stochastics %d and %dslow
for momentum. In essence, the moving averages are the roadmap and the
stochastics is the engine. These simple tools used in an unconventional manner
is the basis of my methods.
We watch the Nasdaq 100 e-minis futures intraday as a LEAD indicator for the
stocks that we primarily trade intraday. We call these futures the ‘noodles’
just like the S/P 500 futures are referred to as the ‘spoos’. When the noodles
rise, stocks tend to follow and vice versa when noodles fall. By watching the
noodles setups, we can get a heads up move on the stocks that we follow. We
gauge the noodles as well as our stocks on 1,3,8,13 and 60-minute time frame
charts intraday. Every morning before the market opens, I take a look at the
daily noodles to get a macro view of the playing field.
The basic chart I use for noodles and stocks is a very simple setup. I use a 5
and 15-period simple moving averages and standard settings on the Bollinger
bands (20 periods and 2 standard deviations). The stochastics at the bottom of
the chart are composed of 2 stochastics oscillators composed of a lead (%d) and
a laggard (%dslow).
Normally, the oscillators are overbought above the 80 bands and oversold under
the 20 bands. However, when the lead %d stochastics flattens out as the laggard
%dslow stochastics is still rising, this can set up a powerful breakout called a
mini pup (PowerUPtik) when the %d turns back up. This immediately sets up a
target at the upper Bollinger bands and a trailing stop under the 5 period moving
average.
In this example of a
(
PIXR |
Quote |
Chart |
News |
PowerRating) trade we made on Nov 9th the day after earnings. PIXR
had a strong gap up on earnings. As PIXR ramped up to 55 off the open, it peaked
and slipped back to 54. When this happened, the stochastics %d stalled out as
the %dslow was still rising. As PIXR’s 5 period moving average continued to hold
support, we took longs at 54.70 at 9:59am when the stochastics turned back up
forming a mini pup for a nice move to lock the 55.50 upper Bollinger bands. The
mini pups are valid until the 5 period moving average is violated on a candle
close.
Mini pups are very powerful formations and even more powerful when used with
converging time frames. A series of mini pups on multiple time frames are a
pattern I call the “Perfect Storm”. This pattern has an over 80% win ratio. I
will go over those as well as future setups in my upcoming articles.
Jea Yu
P.S. Would you like to receive these
daytrading setups in real time? If so please
click here or call 1-888-484-8220 ext 1 for a free trial to my
Underground Trader Pit.
Jea Yu has been involved with the equities
markets for over 10 years. He
specializes with intraday trading in the U.S. equities and futures markets.
Jea also is co-founder and lead analyst at www.Undergroundtrader.com, voted Forbes Best of the Web for
active traders four years in a row. Mr. Yu has authored
best sellers “The Undergroundtrader.com Guide to Electronic Trading†and
“Secrets of the Undergroundtrader†both published by McGraw Hill and two
videos “Level 2 Warfare and Beating the Bear†from Traders Library. Mr. Yu
has been a guest speaker at the Online Trading Expos and has been
interviewed and quoted in major publications such as The Wallstreet
Journal, Financial Times and USA Today as well as having several feature
articles published in Activetrader Magazine.