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TriPack
Registered: Feb 2002
Posts: 1757 |
07-11-02 04:58 AM
The 20MA/40MA
If a trend is strong it will obey the 5MA. Once a trend starts to get weak, the qqq's will start violating the 5MA and making a run for the 20MA and subsequently the 40MA.
There is no need to get out of a long/short position when this phenomenon occurs. You simply wait for a test of the 20MA and then a snap back to the 5MA. The trend should continue with the 5MA acting as support/resistance.
So the 20MA and the 40MA act as support for the qqq's if the 5MA is above the 20MA, the 20MA is above the 40MA, and all MA's are moving up. The angle at which the MA's are increasing is very important. Generally, the greater the angle, the longer the trend.
And if the qqq's are in a decline and you are shorting, the 5MA will be below the 20MA, the 20MA will be below the 40MA, and all MA's will be declining. Again, you will want to notice the angle of the declining MA's.
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TriPack
Registered: Feb 2002
Posts: 1757 |
07-11-02 04:59 AM
Intraday Trends
Intraday trends follow the same rules as daily trends except that they are much easier to deal with. Every day starts with a new attitude and a previous day's action CANNOT serve as the next day's sentiment. Your charts will tell you what to do.
All intraday charts follow the 5MA, 20MA, and the 40MA, religiously. When I say "religiously" I am speaking of days when there will be an up/down day. Sideways markets are a little harder to work with, but require a different strategy.
If you notice today's action in the Nasdaq Composite (on a 5min chart) you can see that the comp opened up below all moving averages, made a run for the 5MA/20MA (and subsequently the highs of yesterday), and reversed to the downside. This reversal was guided by the 5MA and the 20MA. These two moving averages prevent the composite from going higher.
The previous session was similar to today's session (only in reverse) in that a gap up opening pushed the composite higher and the 5MA/20MA supported the comp all the way up to a strong close.
These are just basic details that I want to point out and there are many factors that influence an intraday/daily trend reversal. We will go over these factors later on.
http://www.elitetrader.com/vb/attac...s=&postid=87111
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TriPack
Registered: Feb 2002
Posts: 1757 |
07-11-02 05:05 AM
By Transparency I am refering to the ability to see all markets and market components and how they behave.
You watch:
The Bond Market
The USdollar/Yen relationship (optional)
Both Futures Markets (sp/nd)
Oil Index
Biotechs
Semi's
Dow
....to see if everything is normal. For example, a major news event hits the markets and the bond market starts selling off. You have to be able to spot that and see how that is going to affect trading in other markets.
SE
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TriPack
Registered: Feb 2002
Posts: 1757 |
07-11-02 05:06 AM
5min Chart of The Nas Comp (or ND100)
By now you should be familiar with the 5min chart of the comp and how the moving averages relate to trading.
We will continue with the daily analysis of the comp in the following days.
BREAKS:
Breaks relate to when the comp breaks the moving averages INTRADAY to the upside or downside. How do you know which break is going to be the real deal?
So lets study the anatomy of a break. See the chart attached for an explanation.
http://www.elitetrader.com/vb/attac...s=&postid=87364
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