Trade Set-Ups

Yahoo (YHOO) on its 15-minute chart recently completed three clear technical chart patterns worth studying further. Let’s look and then I’ll describe them: Price was selling off into a downtrend, but a momentum divergence (bottom oscillator) formed with price selling off but momentum turning higher.  The potential for a short-term reversal increased. Price did indeed…

Since December 13th, we have seen six out of seven days provide us with some type of “Gap Fade” tactic to use. Gap fade tactics are extremely profitable and easy to execute using only one “indicator”: Price. Let’s look: I have annotated each gap with a blue oval and indicated whether or not (“Y” for…

We have been discussing various gap-fade tactics, and Thursday I mentioned that it’s best not to fade a gap in the Dow Jones index greater than 100 points and the market must have heard us talking about it! I didn’t know the Market read my blog! In all seriousness, there is no technique that works…

As you may know, one of my most favorite chart patterns to trade recently is the bull/bear flag. Goldman Sachs (GS) presented one of the most beautiful and clear bear flags possible recently. For a review, a bear flag occurs when there is a large momentum (price) move in one direction and then there is…

While today’s action provided a lot of opportunity for nimble scalpers and day traders, there were some key ‘classic’ patterns that unfolded today that I wanted to view closer here. When there’s a gap in the Dow that’s less than 100 points, the first play is always to FADE that gap and play for yesterday’s…

One of my favorite patterns as of late has been bull and bear flags on the indexes and selected stocks. Bull flags work off the principle that ‘momentum precedes price’ and also somewhat that psychological factors cause investors/traders to move prices in equal or proportional waves, which is quite interesting. To identify a “measured move”…

Ever wanted to know what to do when there’s a gap up or gap down in the US Indexes? Here is a type of strategy that can help you add profits and clarity when this situation occurs. Here are the general rules for Index Gap occurrences: The first play should be to “fade” the gap…

The Chicago Mercantile Exchange (CME) stock recently carved out a near-perfect technical analysis ‘flag’ pattern formation that can be used as an example for further study. Remember, a flag is proceeded by a sharp price and momentum impulse, consolidates for (usually) less than two weeks, and then ejects upwards in a ‘measured move’ that allows…

The momentum divergence concept can help you exit a trade near the expected peak in price, or it can help you enter a position with a relatively high probability of success. Recall that the price action moves in waves, as the overall supply/demand imbalance in a trend shifts from buying, to profit taking, to more…

I wanted to draw attention to a conversation taking place between Jordan and I in the Comments section of the post “March 14th Analysis” In it, Jordan asks me to clarify points concerning momentum divergences and the “Impulse Buy” pattern which illustrates the “Momentum precedes price” example. I also wanted to note a new chart…