How I use moving averages to trade exhaustions

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 888.484.8220 ext. 1.

When stocks breakout, they usually peak at a pivot, upper Bollinger band or a stinky 5’s upper range coil resistance. We often like to take shorts off these peaks for exhaustion tightening back to the 5 period moving averages and then 15 period moving averages. These countertrend trades give an opportunity to profit off a stock’s run-up by scoring the pullbacks.

(ESRX | Quote | Chart | News | PowerRating) ran up through the 74.50 stinky 5’s levels to peak 74.60 x .65. We took shorts off the stinky 5’s upper range at 74.58 for a tightening to the 3 minute 5 period ma at 74.15, out + .53 and locked the 1 min full oscillation at 73.70 out + .88. The 1 min mini inverse pups allowed us to stay in the trade for the full extent of the move.



(DIA | Quote | Chart | News | PowerRating) has been strong while the (QQQQ | Quote | Chart | News | PowerRating) has continued to be weak. This discrepancy has been in effect for over five months now and shows no sign of reversing. Waiting out reactions to FOMC meetings to see which plays the lead and which the laggard.

Good trading gang!
Jea Yu