Multiple Day Q's Play shaping up?

D Nas futures showing a bearish engulfing pattern, decreasing histogram, stoch starting to turn.
D Q's turning over with not quite an abandoned baby but very close. Histogram falling and indicators turning over.

Now the 55 min q's is coming upon 50 sma and the LBB is contracting. Also the 55 min nas futures appears that it might tag the LBB as they contract, so I wouuld like to see a small pull back and a turn down on these charts.

Market is starting to look a little heavy and all this pretty much in line with the market calendar.

This trade still appears to have a lot of setting up to do but is something that I have been watching since I enjoy trading the q's.

Thoughts are welcome!!

Weekly QQQs set-up certainly showing a potential downturn, based on my RTP notes.Trade well, ya'll

Gotta love that AAPL gap and fade... Hope someone bought puts on the QQQ's or AAPL this morning. I did, but it was only practice.

Nope in NFLX bought Put Friday.

The NFLX 320 puts are up $7.00.!.! Congratulations!!!!

ntflx trade is awesome darcy....can I ask what tipped you off to buy puts on friday?

It is something I use that I call a gap measure.

When NFLX couldn't go through that measure of my gap on the Daily and began going sideways I knew to buy PUTS. I bought Sept week4 puts. Love trading NFLX and AAPL off the measured gaps.

NLX looks like it is getting support Daily but looks like I may have a little more down on 21.

NFLX is one of those stocks I have watched from the get go. I love NFLX, AMZN and AAPL...CF too...oh just several. Yummy!



Edited 1 time(s). Last edit at 09/23/2013 01:37PM by Darcy2.

I sat on the fence and watched the "Big Dawgs" do it today.

My limited knowledge simply did not allow me to think about trading today. The mixed stuff this morning had me totally uneasy, so I figure, if I am not comfortable with it, just practice and prepare for tomorrow. I just did not get any kind of feel for it today.

Good trade Darcy. That was a "Beast" of a trade! I know Gaps about as well as I know Swahili!

Have a good evening!

I expect AAPL to drop because of the gap up and the huge market presssure. Too bad I blinked and missed the entry point.

Darcy2, I have been following some of your gap teaching and for NFLX I don't see a large gap since earnings on 4/22/13. Did you repeat the $40 gap height again after last earnings on 7/22?

trade4life

There's a full and half gap configuration that I use off the gap of 4/22 - 4/23. I use the half gap since on the daily NFLX never pulled back after the gap of 4/22 - 4/23. There was a full gap range from 5/10 - 5/16,then a full gap pull back 5/16 - 5/29, 4 half gap trades,then a gap and half trade all on the daily. Then 17 candles up. Measuring off the top of the 3rd full gap of 7/18 and using my full gap measurment of 4/22 - 4/23 I estimated the next high before a pull back. When candles 9/10 ,9/11,(almost 9/16) and 9/20 hit a triple top I believed what I had charted would occur...a pull back of half the gap.

Also look at the divergence of the stock on the daily starting at 9/12. Candles are reading a sideways move but Stock RSI, MACD and Directional movement are saying NFLX is weakening.


NFLX had reached the possible est. I had written in on 9/5. NFLX had a better than 70% chance of a pull back.

When I combined all my information I bought a Put around 3PM Friday.

I will admit on today's open I thought I really messed up. Whew...I was sweating.



Edited 1 time(s). Last edit at 09/23/2013 06:29PM by Darcy2.

Darcy,

I want to very sincerely thank you for your continued teaching. It's going to take me a while to deconstruct that last post and try to make some sense of gaps. I feel they are an important thing to learn and add to my knowledge base, though.



Edited 1 time(s). Last edit at 09/23/2013 08:00PM by rufinatti.

Darcy,
Thanks for explaining. Of course I need more help

Are you measuring gaps and gap movements off the wicks?

For this NFLX example your gap is $30 and half gap of course is $15 throughout your study? Looks to be so as I follow your explanation. It lines up well. Sideways movement for a drop, how did you calculate a 70% chance?

I do not use the wicks. I use the body of the candle because that is where the real $'s are. In some gap studies they use the wick...I do not.

I also use moving averages often for support or resistance.

First...I am not trading today...so I can spend a little time on this. I am not fond of this market right now mainly the options are a bit strange IMHO.

I can't say I could calculate in any fashion the 70% outside of the fact that having traded gaps and practicing gaps for about 7-8 years I am at the point where I can about estimate when a stock will pull back from a gap or go higher by measuring gaps and half gaps.You have to also remember you have divergence on the daily a clear signal of a down coming, and the triple top another signal. When I take all these into consideration I figure that out of 100% I have 3 of 4 reasons to buy a Put.

For instance and depending on the stock,
(1) if it gaps up and then rises the length of the gap
(2) and has no pull back but moves sideways...
(3) and then continues the length of the full gap
(4) and repeats this, chances are I have one more rise of the length of the gap before I get a pull back (Daily chart).

Generally (that is all you can say in the market is generally) 3 rises off a gap or 3 gap ups will bring a pull back. Three gaps down will produce the same result.

After that the stock generally continues in the direction of the original gap until it reaches a double/triple top or bottom. When I saw a triple top I knew I would get a pull back of close to half the original gap.

I was a bit shook when NFLX went up on the open as it did. It about blew all my studies to bits and I was thinking I may have to go back and start my gap study again.

On NFLX the gap I calculated ...close on 4/22 was $174.37 and the close on 4/23 was $216.99 or a $42.62 gap not $30.

I round off. Why? Market Makers like rounded numbers generally in $5 ranges.$42.62 is closer to $40.00 than $45.00. Note most options are in $5 ranges even those that are in $10 ranges and up you can see they are mostly rounded. I can say I have seen some that are pennywise but I don't like the way they move.

Take into consideration as well on 1/23 you have a close of 103.26 and on 1/24 a close of 146.86 for a $43.60 gap rounding off to $45.00. Your gap range got smaller from Jan to April. Also note that the gap in Jan never closed either...nor did the half gap. This gave momentum behind NFLX going higher.

If you had bought 2 leaps in Jan of 2013 imagine your profit now with the stock being in the $300.00 range? This is why I have been studying gaps.

When you measure the gap in Jan to the gap in April not by price but by size you can see they are almost the same size. So the question that begs to be answered is...Will there be a 3rd $40.00 gap? I think that will depend on the news and earnings. I know DUH...but remember we are talking another $40 up. This could happen when NFLX reports earnings.

I can't help but notice that NFLX is moving sideways now as it had done and I am wondering about another smaller pull back given the bending of the 20 and 50 moving average on the daily however I have taken note that the bollinger band is tightening on the 233 so I have a possible up move coming...MAYBE. I have conflicting information right now.

I warn everyone never trade off what I think PLEASE!

This is part of the reason I don't share about what I am studying. I don't want anyone to jump on something I am thinking. I am only sharing what I see and what I am STUDYING at this time.



Edited 1 time(s). Last edit at 09/24/2013 11:51AM by Darcy2.

Darcy, thank you for further explanation. I want to make sense of your methods plus use other information on gaps to make my own conclusions. A key I feel with gaps, as with any excellent trading, is to work hard at understanding your expert stocks and the strategies you like to use.