Day Trading & Forex Forum

This five week period provided several good setups on just the 60 min chart alone. By replicating this analysis across three timeframes you can increase awareness and confidence at action points. I believe this continuous multi-frame QQQQ analysis is pretty essential for anyone venturing into any style of Nasdaq trading beyond very short term intra-day scalp trading. Certainly if you are swing trading or position trading it is a great idea to 'get under the skin' of the Nasdaq. After all, despite the prominence of 'stuff' sections (i.e. stuff on the ground, or stuff you make mainly for Chinese consumption) in recent months, for 20+ years now the Nasdaq has lead the way in volume, leadership and creation of America's great companies. So, sooner or later, it will return centre stage. We're not just talking dotcom or spiffy software, but all the industries that drive the 21st century: medical, biotech, alternative energy, e-commerce, security - to name a few areas with vast upside.

So, when the tap is turned on again, whether in the short or longer term, the stocks of the hundreds of triple digit growth, ultra high margin, superbly managed, entrprenurial companies - most of which can be found at the intersection point of Nasdaq and US - will invariably attract major money flow. We can use this relentless trend to our short term advantage.

Using patterns, moving averages, oscillators & volume you can put yourself in a strong position as you widen your net to individual equities. Without this framework you are flying, if not blind, then certainly with impaired vision. During weak market phases such as we have endured for many weeks, dozens, cascading into literally hundreds of strong stocks, will pull back, many substantially so - as they have performed so well in the last up phase. Once the fluff or excess valuation has been taken out in the first part of a market correction, most of these names start exhibiting positive relative strength versus their sectors and indices. This can be observed visually and tracked quantitatively. Screens that compute RS on a continuous basis will reveal these leaders that in all likelihood (barring a short term change in market perception about fundamental momentum) will bolt out of the gate as the selling pressure subsides. Using the same analytical method as used on QQQQ, looking for patterns, divergence &volume clues, these names will flash signals very early in the recovery process. Some of course will be false ones, hence the paramountcy of QQQQ as the major guide. But once you’re in synch with QQQQ across three timeframes, once the market starts to hint at recovery, the next set of problems resolve around choice, selectivity & position management as the fruits of careful analysis abound and dozens of high RS stocks print high reward:low risk setups in quick succession.

Abbreviations

• HWC: High wave candle (- or + bias depending on where it appears)
• SR: Support resistance or congestion area
• -BE: Bearish engulfing pattern
• +BE: Bullish engulfing pattern
• ST: Short term trading position orientated to 15min/60min charts with tight stop
• IT: Intermediate trading position orientated to 60min/24h charts with layered stop
• -FWR: Falling window resistance
• +RWS: Rising window support
• TL: Trendline (- or + depending on angle) (eg +TL3: rising TL with three touch points)
• MA: Moving average (10/20/50/200 SMA used on 24h chart)
• -US: Upper shadows (+LS lower shadows)
• -SS: Shooting star after a recent uptrend
• FR: Standard fibonacci retracement levels (eg held at FR50%)
• STO: Stochastic oscillator