Dynamic Trend Profile

Friday, July 7, 2006; 10:45AM NYT-- (I am experimenting with ideas to better help our customers. This is my first try at a new idea, so please be patient as it is a work in progress.)

Below is the current DT Profile for the Nasdaq 100. In addition, attached is a current PA trade in progress. (It wasn't a pristine trade setup, but I liked the risk/reward parameters as it correlates with technical analysis impressions, and since I use to be a pretty decent technical analyst, you might appreciate my observations.)

If you notice below the current Nasdaq 100 Trade Balance PC and PB room has blue in it. This means the longer term trend is still up. Red has encroached into the SD and PA rooms. In my opinion, if it were to break down here and begin to trend lower, within the next week or two, you will see red getting into the PB room, and you would find more reasons to be looking for shorts the next couple weeks.

If this low holds, it will continue to base out and --in all probability-- within two weeks you will see shorter room offer more blue setups to start with, and later better buy setups will filter back into the higher rooms, at least this is my guess.

(disclaimer: The only position I have currently are 10 July 37 puts taken last week as 'insurance' and to help me practice trading options.)

Monday morning, 10:30AM, July 17, 2006-- Here is a quick update for the Nasdaq 100. (See previous post for original Nasdaq 100 chart reference.... Yellow color in chart below represents what happened since first post.)

PA target was hit. My personal opinion: I still think there is good potential to work to the next level lower, maybe later this week?

Disclaimer Update: I covered my Puts today for a nice little profit. I would like to stay short, but needed to regroup after being away from markets on vacation.

I wanted to add to this thread the recent picture of the Q's (QQQQ- Nasdaq 100 Trust) and how it also helped me determine I wanted to buy some Puts before leaving on vacation the 2nd week in July.

The Q's are very similar to the previous ND trade setup logic and chart structure. Notice in the Q's how there was an SD and PA recent trade. Both hit their targets. At the time the PA trade looked really interesting because I liked the RRR and limited risk in the setup, but when you went two rooms higher it did not have the verifiable weakness needed in the strength bars. However, the SD room technically qualifies as a trade. One way I try to work around less than pristine things like this-- when I really am interested in taking a trade-- is to combine trade setups or ideas onto one chart and then use the internal trade logic in both to help manage the trade.

I felt more comfortable going short when analyzing the ND #F setup, and then combining the idea with the QQQQ PA and SD logics. All the trade qualifiers weren't pristine, but I liked the risk vs reward parameters and the overall trade picture. After thinking the idea over, I decided to do a small options Put play instead to limit the risk but possibly improve the potential reward expectations.

This idea worked out. Monday I was able to come back from vacation, see the Puts were profitable, and I took the profits. I will continue to experiment with some of my trading ideas and share more with you in the future.

I found myself wanting to take a smalll position in this SC room Nasdaq 100 e-mini trade, using pit-only data. Let's see if my thinking was correct. It is not a powerful setup yet, just an acceptable one for now. Hence, why I am only interested in a smaller position... to reduce risk if wrong.

Also noticed QQQ's similar setup signal... see below example.

It has been a while since we updated the Nasdaq 100, so here is a weekly and daily chart on the Nasdaq 100, chart work done Wednesday evening.

Here is an Nasdaq 100 update a day later....

Here is update on Nasdaq 100 daily chart. Nice bounce today off a support area. Monitoring now how it acts if it approaches resistance areas.