The High Five
I want to share with you a unique approach to staying on the right side of the market when you are day-trading the SP500 futures, using a special synthesized indicator I've dubbed the "High Five."
The "High Five" consists of the following indicators:
the NASDAQ Composite Index (the "NAZ")
the TRIN
the VIX
the TICK index
MER (Merrill Lynch Stock)
Together, these five indicators can paint a clear picture of the market's mood and direction for that session. When they all point in the same direction, you are ill-advised to fade them, and when they give a mixed picture you can often save time and money by staying flat.
Using the High Five is a simple way of taking the pulse of the market right now, in real time. It is not the "Holy Grail," even though I've had lots of feedback from traders who think it's a miracle.
Synthesizing the High Five takes practice, and involves watching the markets closely every day, learning to read its nuances. It's not really possible to learn this in a few months, so don't expect miracles right away. But if you treat S&P500 futures trading as a serious business, success will inevitably follow as you progress in your skill development.
What you usually find with the High Five in day-to-day trading is the market getting ready to "roll over" from a bullish scenario to neutral or all the way to bearish, or vice versa. It can also tell you when a trading day is likely to be "one-way" and when you need to go ahead and sell a market that is breaking down, or buy a market that is breaking out.
The High Five is an incredibly valuable tool to help you make trading decisions during the heat of the action. All the details on interpreting the High Five are available for subscribers in Chapter 5 of my S&P 500 Trading Handbook.
Below you'll find the quick reference table for the High Five, giving you the parameters to look for as well as the definition of each indicator.
* TRIN becomes "overcooked" bearish and due for a reversal when the readings reach above the 1.80-2.00 level on the day AFTER a previous down day with extremely high TRIN readings. Prepare to reverse long upon seeing such readings.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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