Blog

1/26/12 Chart of the Day

[dc]T[/dc]his chart shows an Anti pattern in the chart of Apollo Group, Inc (Nasdaq: APOL). This is an important trend termination that often leads to some very clean trades. This is a repeatable pattern in all timeframes:

  • A: Overextension. (In this case 3 pushes and climax beyond the upper Keltner channel.)
  • B: Sharp countertrend momentum indicating that sentiment and control has shifted in the market.
  • B1: Note that this also takes the MACD to a significant new low, relative to its recent history.
  • C: Small consolidation. In essence, this is the first bear flag in a possible new trend. The actual entry is on a break out of that consolidation.

This chart was taken midday at the time I entered a short trade with an initial target in the mid 52’s. The term “Anti” was coined by my friend and mentor Linda Raschke in Street Smarts: High Probability Short-Term Trading Strategies, and it is also one of the seven trading patterns I cover in considerable detail in my book.

AdamHGrimes

Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 4 Comments

  1. Mlevique 01/27/2012

    nice trade!

  2. Markus 01/27/2012

    I love this LBR stuff, even so I have not used it the last 1.5 years. I have filtered the mkt data since then via Volume Profile (FT71 approach) which has let me better grasp the context of a potential trade. In your Anti example above it would be interesting if the area around 58 has been tested before, if there was traded a lot or if the volume at this price area was very low, etc. Anyway, Linda is great and you, too!

    1. Adam 01/28/2012

      Hi Markus,
      I try to keep it very, very simple but I do think the idea of putting trades in context is key. I never found much real utility in volume analysis of any kind, but that doesn’t mean it isn’t there. If it is working for you and you’re making good money… keep doing it! Thanks for your kind words on the blog and my writing.

Comments are closed.