rophesying a sharp snap to the downside for the last few days.. I was wrong. Obviously the market rallied today despite my expectations. So be it. Fortunately I was not in any un-salvageable positions, and I was fortunate enough to have some time to watch the market during the first hour and a half. That allowed me to employ some new day-trading techniques I've been looking at, and I'm going to share them with you tonight. But first, the daily scores:
Now for the interesting part. Regular readers will recognize my affinity for Heikin Ashi candles. I love 'em. Last week I posted an illustration of the "twisted ribbon" that I look for with Heikin Ashis that shows the market an an inflection point. Once the candles get compressed, the favored direction of the market is shown and a play can be made. Check it:
Here is what I saw just prior to the market open (lighter shaded region is post / pre market trading.) From this, I thought the market was poised to open higher and then quickly reverse course as it has done all this week:
Here is what I saw on the first few minutes after the open (this is a 15 min chart). The opening candle indicates a moment of indecision in the market. Based on the initial move of the market on the chart on the 5 minute chart (not depicted) I bought a Put on the $DIA. However, note the lower oscillators have taken a positive slope. Now, I'm thinking the bias is to the upside.. may need to neutralize my trade.
This is where I got nervous about my trade. Below we see a lower wick of the candle that is higher than the previous, a body that is higher than the previous, and a top wick that is ever so slightly higher than the previous. RSI, Slow Stocastic, and MACD are upward sloping. The MACD histogram has stopped declining. I'm a bit concerned now..
Here's the coup de gras. Large body candle, upper wick way higher than the previous... I'm out. Purchased a Call to neutralize the trade for the rest of the day.
And here's the rest of the day. The decision to neutralize when I did was a good one.
So, I was wrong about the timing of the snap back. Do I still think it will happen.. of course. I would definitely not chase this trend... there will be plenty of more opportunities to get in low and sell high.
Hope you enjoyed the pics!
GOOD LUCK TOMORROW!