Jack Be Nimble
Good morning.
Well, if you’re reading this I guess I didn’t put you totally to sleep
yesterday, so we’re off to a good start. With that said, let’s get right
to today’s action.
Despite the modest range and low-volume open, the summer trading theme of “Jack
be nimble, Jack be quick” was in
full force this morning. There were several opportunities to profit from a
series of three-minute oscillations within the first 90 minutes of trading,
including shorting the opening low-volume futures gap and/or entering
three-minute trend reversals using four different one-minute MA cross signals as
low-risk entry points. We’ll talk more about one-minute signals as time goes on. Each opportunity had $0.30 – 0.50 profit potential.
As is typical in the summer, some of the best opportunities are found shortly
after open, and I’m expecting a fairly light trading day on this summer Friday.
As I mentioned in yesterday’s column, I prefer to use the Nasdaq E-Mini Futures
(NQ01U) as the base for trading the QQQs for several reasons. To help
provide perspective, I’ll be including the approximate equivalent QQQ price in
blue on the NQ charts. With that said,
let’s go to the early chart.
(1) Approx.
equivalent QQQ price
In yesterday’s
introduction, which you may want to keep handy as a reference guide as we go
forward, I discussed the various chart indicators that I used to gauge intraday
trends, ranges and momentum strength. In particular, I mentioned looking to the
15-period Moving Average (MA) throughout the day to indicate trend direction and
support. While there are many signals and combinations that can provide similar
insight, I’ve found 15-period Moving Averages (MAs) to be highly useful in
identifying lower-risk intraday trend entries to set up profit potential. A
snapshot of yesterday’s mid-day three-minute chart provides an excellent
example:
With credits to Dave
Landry, you can label this chart “Inside
the Big Blue Arrow.”
And yes, blue arrows can work intraday just as well as longer term, and I do
subscribe to the intraday chapter of the trend-following moron club under the
right conditions.
What are the right conditions? Well, a 45-degree sloping 15-Period MA with lower
Bollinger Band support nearby can be helpful. A good rule of thumb is that once
the 15 MA starts to flatten out, the trend may have exhausted itself at which
point the MA would become the fulcrum of an oscillation once prices adjust to
the new level. At that time, I’d be more interested in oscillation or reversal
opportunities.
In future updates,
we’ll discuss use of the one-minute chart (which I call my microscope) in
further refining entries, as well as making the transition from trading stocks
to the QQQs.
As far as the rest of the
trading day goes, I typically try to
complete my weekly trading activities by 2:00pm EDT on Fridays to begin shutting
the trading brain down for the weekend. One of my pet peeves is spending the
weekend mulling over a stupid trade at 3:45 pm EDT on Friday, which would bug me
to no end despite how profitable the week may have been…and it’s been a good
week. The market will be here again on Monday.
Enjoy the weekend!
Don Miller
For
an introduction to Don Miller’s style of trading, click here.