Fly Fishing the Stock Market: How to Search for, Catch, and Net the Market's Best Trades

THE STRIKE INDICATOR ENTRY STEPS

Following is the sequence of events that lead up to the strike entry.

Long Position

The Set-Up

1. The stock opens.

2. Wait for the price to pull back under the 8- and 21- bar EMAs.

3. Wait for the fast MACD line moving average to drop below the Signal line (5-minute chart).

4. Wait for the 8-bar EMA to move beneath the 21-bar EMA.

Now the trade is set up for entry.

The Strike

1. Watch for the alert: a bullish MACD crossover.

2. Watch for the trigger: a price close above the 8-bar EMA or into the value zone occupied by the space between the fast and slow EMAs.

3. Buy on the next bar.

How many times have you jumped the gun, chased an opening, and gotten filled at the high of the first 30 minutes of the opening only to have the bottom fall out, compliments of a bear raid? This technique effectively sidesteps this amateur trap; it puts you a notch above the potential low of the day and, most importantly, controls risk by enabling a tighter relative stop that is less likely of being hit.

Short Position

The Set-Up

1. The stock opens.

2. Wait for the price to pull up above the 8- and 21-bar EMAs.

3. Wait for the fast MACD line moving average to rise above the Signal line (5-minute chart).

4. Wait for the 8-bar EMA to move above the 21-EMA.

Now the trade is set up for entry.

The Strike

1. Watch for the alert: a bearish MACD crossover.

2. Watch for the trigger: a price close below the 8-bar EMA or into the value zone occupied by the space ...