How I use moving averages to trade exhaustions

  • May 10, 2006
  • Jea Yu


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. To receive a
free 7 day trial to Jea Yu’s Underground Trading Pit,

click here or call 888.484.8220 ext. 1.

When stocks breakout, they usually peak at a
pivot, upper Bollinger band or a stinky 5’s upper range coil resistance. We
often like to take shorts off these peaks for exhaustion tightening back to the
5 period

moving averages
and then 15 period

moving averages.
These countertrend trades give an opportunity to profit off a stock’s run-up by
scoring the pullbacks.

(
ESRX |
Quote |
Chart |
News |
PowerRating) ran up through the 74.50 stinky 5’s levels to peak 74.60 x .65. We
took shorts off the stinky 5’s upper range at 74.58 for a tightening to the 3
minute 5 period ma at 74.15, out + .53 and locked the 1 min full oscillation at
73.70 out + .88. The 1 min mini inverse pups allowed us to stay in the trade for
the full extent of the move.

(
DIA |
Quote |
Chart |
News |
PowerRating) has been strong while the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) has continued to be weak. This
discrepancy has been in effect for over five months now and shows no sign of
reversing. Waiting out reactions to FOMC meetings to see which plays the lead
and which the laggard.

Good trading gang!

Jea Yu