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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.
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