The SPY printed a new recovery high yesterday but the Lehman gap top held as resistance on a closing basis. Today the QQQQs carved out yet another higher high in early trade, but was not confirmed by either the SPY or the DIA. Non-confirmation at support/resistance levels, usually foreshadows a reversal.So we try to incorporate this into our day-trading strategy. After the initial retracement, draw in a trendline and extend off of the first two points. Short the trendline breach.
On the 15 min. AMZN chart below, we observe that each test o the 50 SMA (green MA), is followed by a higher high. If we get a lower high tomorrow and weak market conditions, we'll be looking to short AMZN.
2 comments:
What is a Lehman gap?
Hi Jean,
I call it the Lehman gap, but in fact it occurred about two weeks after the Lehman bankruptcy as the world financial crisis was gathering momentum. The gap range is $107.15-110.34 and it took place in late Sept. 2008 if my memory is good.
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