Make your money in the first hour of trading

  • November 28, 2005
  • 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 1-888-484-8220 ext 1.

Markets are either in a
trend period or a consolidation period. The trend period can be
evidenced by 60-minute Nasdaq 100 e-minis (aka noodles) showing a rising
5-period moving average (on uptrend breakouts) and a rising 15-period moving
average with a channel in between. Consolidations have flat 5 and 15-period
moving averages. While the noodles may be flat, there can be some exceptions
with stocks in the first opening hour since that’s when we have the most volume.

We traditionally do not like to play when the
noodles are in a consolidation because that usually means light volume and lack
of follow through momentum. This applies strictly from 11am to 2pm EST, the dead
zone period. However, the first hour has the most volume and this gives us some
opportunities every morning to play.

Friday morning, we took
(
AAPL |
Quote |
Chart |
News |
PowerRating) shorts
initially at 67.70 at 9:35am for a channel tightening exhaustion slip on 1-min
stochastics 90 band mini inverse pups off a 3-minute shooting star candle. The
noodles 60-min ma’s were flat. AAPL ironically didn’t slip with the 3 minute
noodles and continued to hold support at the 3 min 5 period moving average at
67.75. This was a very important fade. As I always say, “Who better knows how
strong a stock is than someone who is short?”. The buy fade at the 3-minute 5
was very evident. Once the 1 minute stochastics mini inverse pup stopped
slipping, we realized that AAPL was extremely strong and we STOPPED out at
68.80, out – .10 and REVERSED the trade long at 67.83 at 9:45am.

While our 1-minute mini inverse pup slip for a
channel tightening premise didn’t pan out, the reverse premise of a 3 minute
mini pup DID trigger. AAPL squeezed up through its 67.85 pivot to allow us to
scalp the pops to 68.23, out + .40. AAPL eventually squeezed up to the daily
upper Bollinger bands at 69.13. Once we spotted the peaks there, we stepped in
SHORT again at 69.07 at 10:17am for another 1 minute mini inverse pup at the 90
band for an exhaustion and channel tightening. This time AAPL did slip through
its 3 minute 5 period moving average support at 68.90 to lean back down to last
pivots to lock the shorts on the full 1 minute stochastics oscillations at
68.60, out + .47.

All this occurred all the noodles oscillated from
1697 to 1703 and back. This range is too small for a trend to form. The 60 min
noodles were a consolidation the whole time.

The tier 1 generals of the stock market
(
KLAC |
Quote |
Chart |
News |
PowerRating),
(
QCOM |
Quote |
Chart |
News |
PowerRating),
(
BRCM |
Quote |
Chart |
News |
PowerRating),
(
MSFT |
Quote |
Chart |
News |
PowerRating) have not been making advances on the
noodles breakouts. Meanwhile, the DIA and QQQQs have hit their monthly upper
Bollinger band targets for the year so far at 109 and 41.55 respectively. This
leads me to believe we are due for some pullbacks this week as markets need to
take a breather to push any higher. Watch the weekly 5 levels for supports at
106.70 and 40.60, this is the levels we have to base before breaking any higher.
Good trading all, stay aware and assertive!

** I will be on vacation from November 28th
through December 3rd, 2005.

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.
Jea also is co-founder and lead analyst at
www.Undergroundtrader.com, the
premier
online chatroom for active traders and voted Forbes Best of the Web for
active traders four years in a row. Undergroundtrader.com has catered to
over 7,000 traders wordwide since its 1999 inception. 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
is a popular 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.