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Saturday 3 May 2008

Trading morning Gaps with NYSE A/D

Sometimes NYSE A/D opens up in a high range of say 3-5. When NYSE A/D is above 3 I'm looking for long trades, however, on this type of trading day, this strategy would have done badly because the gap up in the morning open was faded. Considering NYSE A/D started out around 5/1 and quickly dropped into the 2/1 range, this would indicate the morning gap is getting faded and I want to follow my trade signals without a LONG bias. Overall, put less confidence in NYSE A/D levels when there is a morning gap because these gaps have a high probability of getting faded. Give the market about 45min from market open to see if the morning gap will hold.




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