The Gift
There are mornings and then there are MORNINGS.
Today was the latter as we had a textbook gap and trap which was preceded by
daily and 60-minute divergences and the gift of a pre-market NQ lid that
provided as much as $1.20 on a QQQ short and $0.40 on the bounce off — you
guessed it — our old faithful 60-minute support. Again, we’ll let the charts
speak volumes.
2001Â 12:00 PM
Approx. Equivalent QQQ Price
The gift pre-market
clue we were handed was in the form of a clear 9:15 A.M. ET 1620 NQ breakdown
which provided immediate support for shorting any pullbacks (climbs) toward it
with a premise stop being a move above 1620 as noted below.
Wednesday November
14, 2001
Keep in mind that
much of the price action as reflected in morning gaps reflects illiquid Globex
session moves which can greatly exacerbate otherwise “normal” price
moves – if there is such a thing anymore. We saw it on the way up at times in
1999, on the way down in 2000, and are seeing it again to some extent on this
recent climb, including prior to this morning’s general session. Understanding
that premise can go a long way to explaining price swings that may on the
surface appear unreasonable at times.
Good Trading!