FIR 20: The Technology Engine - NASDAQ!! Wear Your Seatbelt!!

Financial Investing Radio

I spent some time living in England many years ago. For a while I drove a Mini...it was a very small car with excellent handling. You could handle the small country roads quite well and cornering was a snap...it was a peppy car!!

Sometimes the NASDAQ futures reminds me of that car...zippy!

In this podcast we are looking at the NQ futures Market Effectiveness Chart and the price chart. Many of the same characteristics apply as what you see in the E-mini futures charts.

We are taking a look at June 26, 2017; and we start with the Market Effectiveness chart...as you know..we are looking for a gear shift to let us know about the opportunities for a trade.

Go to financialinvestingradio.com, look for FIR #20 and you will find charts and videos there which accompany this podcast.

I am going to illustrate 6 opportunities that are associated with the gear shift during the first two hours of trading.

As you open the charts take a look at points A and B on both charts. Price had initially been going up at the open, but had just started to go down. The mis-alignment is clearly that price is pushing down while the market elements are trying to push things up. The alignment comes just after point B where the two are correlated and you have the strong sell off.

Let's look at point C... As you look at the price chart ask the question, what has price just been doing, "going down" is the answer. So in this case the trade for C is a contrarian trade, to the upside. Which is quickly followed by gear shift "D". Again, ask yourself, what has price just been doing? "Going Up" is the answer, so you draw a trendline going up, and look for the break to the downside. When that occurs and when you see the Correlation on the Market Effectiveness chart align..then you have a high probability trade, in this case to the downside.

Gear shifts on E and F have some similarities. In both cases on the price chart, the price has been going down just before the gear shifts, so we look for a price break to the upside. The other thing to point out is the very large & noticeable divergence between price and the market engine indicator. This adds to the probability of trades to the bullish side, remember to wait for the break.

In all cases the "gear shift" does not mean you enter the trade. Be sure to look at other factors like market structure and other context.

Remember to wear your helmet when driving a zippy car like the Nasdaq...sometimes the slippage can be a little painful!!

Until next time, Trade Safe!