Jea Yu has been involved with the equities markets for over 10-years. He specializes with intraday trading in the U.S. equities and futures markets.To receive a free 7 day trial to Jea Yu's Underground Trading Pit, click here or call 1-888-484-8220 ext 1.

The (GOOG | Quote | Chart | News | PowerRating) and (ADBE | Quote | Chart | News | PowerRating) daily pup breakouts pointed out on Wednesday played out very well for us. Pup patterns are when the 5-period simple moving average stalls sideways as the 15-period simple moving average continues to rise. Mini pups are when the lead %d stochastics stalls on the rise as the laggard %dslow stochastics continues to rise to form a wedge like breakout

ADBE reached its daily upper Bollinger bands at 33.65 target hit from our 33.18 entry and GOOG gave us a nice $5.50 gain on the morning gap (we were long from 397.80 to lock 403.30) as well as a doubler on the Nov 400 calls from $2.50 entry to lock $5 for a 100% two day gain. Even more interesting is how we played out of the money GOOG 400 calls just 2-days before options expiration when GOOG was trading in the 397s meaning this was pure time premium. However, since daily dual pup and mini pup formations are the most powerful 2-day breakout patterns, it was a no-brainer trade.

A dumper is a stock that gaps down several or more points after a news event like earnings. (ADSK | Quote | Chart | News | PowerRating) was a dumper this morning on weak earnings guidance from 47.10 close. On dumpers, we usually like to wait for the 3-minute 5-period simple moving average to either reject the bounce or base and provide a support for tightening up to the 15-period moving average.

ADSK met this criteria Friday morning as it gapped down and then took a bounce to test and get rejected off the 3-minute 5-period moving average. We took shorts at 41.95 at 9:43am as the 3 minute stochastics formed a mini inverse pup pattern when the 3-min 5-period moving average rejected down. Our trail stop sat at the 3-minute 5-period moving average around 42.15. ADSK promptly leaned down hard to lock 41.25 overshoots, out + .70. Eventually ADSK leaned to 40.56 before bouncing. This was a classic textbook dumper short set up and one of my favorite consistent money makers.

The Nasdaq finally broke out through that critical 1668 line in the sand resistance I mentioned last week for very nice ramps up to 1695 peaks. Watch for continued follow through up to the 1703 x 1710 level next week with supports at the 1670 level. Good trading all!

Jea Yu

Jea Yu has been involved with the equities markets for over 10 years. He specializes with intraday trading in the U.S. equities and futures markets. Jea also is co-founder and lead analyst at www.Undergroundtrader.com, the premier online chatroom for active traders and voted Forbes Best of the Web for active traders four years in a row. Undergroundtrader.com has catered to over 7,000 traders wordwide since its 1999 inception. Mr. Yu has authored best sellers “The Undergroundtrader.com Guide to Electronic Trading” and “Secrets of the Undergroundtrader” both published by McGraw Hill and two videos “Level 2 Warfare and Beating the Bear” from Traders Library. Mr. Yu is a popular guest speaker at the Online Trading Expos and has been interviewed and quoted in major publications such as The Wallstreet Journal, Financial Times and USA Today as well as having several feature articles published in Activetrader Magazine.