There are as many as 10 NET indicators. Do we monitor all of them?The primary indicators are 1) Oscillator crossover through Average, 2) Retest/Failure (RT/F), 3) Time of Day (TOD) and 4) Fibonacci retracements. NET traders look for combination of these four indicators occurring simultaneously. The more indicators occurring coincidentally on the 5- and 30-minute and even better on larger time frame charts the more powerful these indicators are in terms of identifying powerful moves.
Secondary and tertiary NET indicators add to the trade’s probability of success when only two primary indicators are present. Ticks, Advance/Declines, moving averages, Uni bands (on 30-minute chart only), ABC swing target calculations (T2 and T3) and Tenets 1/2/3. The best trades have a majority of primary indicators with a few secondary indicators.
For example, one classic trade in 2006 saw a gap up to all time Dow Jones high and a 6-year high for the S&P. Up volume was 6:1 over down volume, Advance/Declines (A/D) were 3:1 and Ticks were very high at 1200+. Both markets had a strong uptrend day. Days later, the market built on these highs and gapped up to yet another new high with the same technical (i.e. price) breakout. However, while the first breakout continued in the gap-up direction, the second breakout did not. Option Magic students bought puts and the market dropped 10-12 S&P points in the next 90 minutes. Both breakouts looked the same on the price chart but the indicators of the second breakout did not confirm the opening strength. The A/Ds were negative and the Ticks were 500-600 less than the previous time frame.
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KB » FAQ - Technical
KB » FAQ - Technical
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