When Last We Met…
The Qs are near their intraday
lows as we approach midday as Friday’s
downtrends remain intact on all significant periods. Both the three- and
13-minute downtrends supports have provided exceptional visual trend guides this
morning for those short from yesterday’s triggers (more on that below), as well
as for those scalping the morning contra-trends long. At this point, a reversal
of both of these significant trends are prerequisites for much interest in
longer-term long positioning.
Monday January 14,
2002Â 12:00 PM EDT
Every now and then
this business handsomely rewards those who just keep on keeping on. The best
opportunities often arise when those who have had it throw in the towel, or just
momentarily walk away. While much of the trading world was dormant and at lunch
on Friday, or perhaps simply got caught in Friday morning’s low-volume
pre-Greenie chop and decided to call it a week, many of those that simply kept
focused on a potential QQQ diamond in the rough were rewarded for their focus,
patience and hard work. Let’s quickly rewind the videotape, picking up where we
left off in Friday’s
column:
Met …
Friday January 11, 2002Â 12:00 PM EDT
Trigger, Two Hours, and $0.80 Later
For Q traders, it
simply doesn’t get better than that, and I again congratulate the growing number
of believers who profited handsomely from the setup. So where could one have
potentially failed? Several areas:
- Getting lost in the price
chop. Solution: Focus on the 5-MA as
it never came close to reversing. - Trying to interpret the
pre-Greenie rumors and actual speech remarks. Solution:
Turn off CNBC and the news feeds and simply follow true market reaction by
keeping your eye on the charts. - Not having confidence in
the setup. Solution: Drill these
biased patterns into your mind day after day so they become second nature
and review my recent lesson
on probability. Was the probability biased toward a drop? Absolutely.
Could the condition have changed so that we might have triggered long on a
reversal in the hourly trend? While not likely, the market will do what the
market does (heck, we could have captured bin Laden), so you bet and we
might have reversed. Could the trade have stopped out after the short entry
was triggered? Once again, absolutely. Might the Qs have dropped a mere dime
before exploding to the north? Indeed, yet by scaling out with trailing
stops you still would have been profitable.
OK, hopefully you get the point and I’ll get off
my soapbox shortly. My point is simply that a setup such as this isn’t about
anyone or any setup needing to be right or wrong, and there’s certainly no such
thing as a slam dunk in this business. Heck, Greenie might have come out and
preached the irrational unexuberance of the
equity market, in which case, today’s column would have reflected an analysis of
a post-entry stop to reassess or perhaps even a reversal to the long side. Yet
if you find yourself asking questions similar to my rhetorical questions above,
and if they’re preventing you from entering these sorts of textbook setups (and
this was as clear as they come), then additional work remains to gain confidence
in your premise, trigger and stop on every setup, and to replace specific trade
doubts and fears with the acceptance of pure probability and accumulation of
trades over time, which the Q patterns are designed to provide.
To that end, and giving the accelerating demand from traders to learn more about
the Qs and ideas as to how to trade them effectively, keep your eyes peeled for
some very exciting and invigorating news on the QQQ education front, which will
include several industry innovations in learning technology that will simply
knock your socks off while striving to increase the probability of your profit
potential. In the meantime …
Good Trading!