December 11 Premarket

Secondary rallies (here is a video about this discussion) are an excellent analysis tool, and they are also a specific type of trade setup to be looking for – springs also. As talked about before, I knew guys on the trading floor at CBOE who did very well by doing the “contrary” trade setup of looking to short into the automatic rally after the preliminary support in a downtrend. The PS marks a bullish event shorter-term, and has meaning down the road. But that PS low will almost always be retested, and a new low will be set- meaning by waiting for the rally to take place, that specific trade is a very high probability event. Markets are all about probabilities and risk (it’s hard to tell one from another actually).

Likewise, you can do very well in markets by doing the other trade – buying into the automatic reaction after the preliminary supply in a rally. PSY is the first EA in a rally. If the market/stock is very strong, that trade setup is extremely high probability. A “123 reaction after the buying climax” is a specific version of it. And retests of the  initial secondary rally low bar are another version of it – one minute to weekly charts. Also, in a strong uptrend, that specific situation can be used as an analysis tool to see (assume) that on a bigger time-frame, the PSY and secondary rally stuff will be part of “distribution morphing into reaccumulation”. So once again, this is how daytrading in my early days allowed me to begin to learn (struggle) all different kinds of trade setups to implement into various time frames.

Some recent examples, and I’ll explain more in another post – well ahead of time, in the chart in Friday’s premarket, I drew in the support area I was looking for in BTC. (And also the DPW one.) I have BTC accounts setup, and as I told Stevie on Saturday, missed that trade, doing other stuff, but the trade was there certainly – here is the result and now. So for all of the useless emotion and angst about BTC by way too many people – there was a beautiful specific trade setup, +20% and back into resistance. Meaning trade a strong market from the long-side, take some profits (maybe). And why do people freak out about this market, just use stops.

Gold is trading in the range, more stopping action (SA has been discussed) to me, not EA. SA means bounces. There was a huge change in the COT numbers and they’ll keep looking better. Two weeks ago, I talked about how the “break below 1260 would get pretty rough” – long liquidation of the rally from the early July low into the push thru 1300. I started selling some of that early July gold purchase (talked about in that premarket) way too early at right above 1300 as it then kept going to 1357. I’m now looking for the next quality buy area to setup. Volatility will help the setup. On the chart, you can see the weak handed buying into the mini BC. Why do people constantly do this with gold. I see that stuff, and I know that they have to be washed back out. Also, notice where that high area is. It is the high bar before the last bit of the liquidation. So now we are setting up the areas.

The QQQ has the support areas set up for springs, potential short-term call option stuff. That big volume is still bugging me. It’s trying to get worked off, as the relative volumes are falling since. Look at the previous reaccumulation areas this year, and notice what happened to the relative volumes.

BTC related – long OSTK, back into some resistance. Watching SQ, with the solid PS. Plus RIOT, XNET, GLNNF (long), DPW. Watching the reactions in CANN, OWCP, PXS, MSRT, BUR, FAGI, PPCB. CBIO looks like an upthrust.

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About traderscott 1146 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

2 Comments

    • Hi Visao. I’m going to do a post with a bunch of these terms. PSY is preliminary supply, the first EA ending action. The first ones are virtually always retested or likely exceeded. And either a bigger top, distribution, or in very strong stocks, it will “morph” into reaccumulation.

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