Respect Until Broken
Well, we’re off our
early lows as the NQs found a vine to grab onto at 1532
(approximately $38.30 on the Qs), as the quicksand was quickly getting neck
deep. Now that we’ve had the subsequent bungee bounce and consolidation, all
eyes at this end are on the 13-minute 15-MA, which has supported the current
downtrend for what seems like an eternity. (Has it really only been two days?)
In other words, "respect until broken"
as I’ve said before, yet it could potentially support a longer-term reversal if
we cross and base to the upside.
Thursday
August 16, 2001 11:50 AM EDT
Diary of a Stop
My recent lesson on reversals suggested one potential setup with various entry
and stop triggers. This scenario is one of my favorites, and yesterday
afternoon’s attempt at a market reversal provided a nice opportunity to trade it
out. In the lesson, I noted two potential entry triggers were a price
cross of the 15-MA in the direction of a strengthening stochastic bottom or a
post-cross test-and-base in the reversing direction if additional confirmation
was desired. In both cases, a stop would be triggered by an MA re-cross
back to the downside.
The setup presented itself at about 2:30 p.m. EDT yesterday where we had
strengthening 13-minute stochastics coupled with a three-minute price cross in
the direction of the potential reversal. If one had entered based on the
price cross, all eyes would then have been on the three-minute 15-MA for a
necessary hold, which failed at approximately 2:40 p.m., which would have triggered
an immediate stop. On the other hand, if one had chosen to wait for a
post-cross test-and-hold prior to entering, the entry would not have been made
as the three-minute chart clearly failed to base. In either case, no harm
would have been done as the market continued its crawl back into the abyss as
either the immediate stop or decision to wait effectively positioned the trader
for the next setup.
Wednesday
August 15, 2001
Good trading
P.S. I’m pleased to announce that I’ll
be hosting a two-day
QQQ trading learning forum immediately following TM2001 at the Venetian
Hotel and Resort on October 7- 8, 2001. It seems like we’ve struck a pleasant
nerve with the Q column, and I look forward to sharing my thoughts and views in
a live forum highly conducive to learning and interaction, as well as simply
meeting many of you in person. So whether you trade the Qs or watermelon
seeds, consider extending your stay just a bit and we’ll combine some very
intensive trading discussions and some fun!
For
a more in-depth look at how Don trades the QQQs, click here.