Short Side Vigor

Overall volume was light today (Columbus Day) as the S&P tested recent highs. Per recent comments, I have been favoring the short side at these levels. Yesterday I tried a short in NTES and ended up scratching. Today, my short side trades showed a bit more vigor. NTES responded much better than I expected. BIDU had a nice matching congestion pattern (looks like small H&S, but not at top of recent price action) that was good for a quick downside pop. Note that the first hour or so in NTES was also a matching congestion with yesterday's action.

Perfect World - No Counter Trend Impulse

Earlier tonight I exchanged comments with another trader about a failed trade. He was trading a gap up, with the trend, and took an entry after a shallow (38-50%) test into the intra-day ambush zone (38-62%). The only sign of a problem was somewhat of an impulsive (counter-trend) move coming into the ambush zone.

A key is to look for non-impulsive counter-trend corrections to trade. I traded PWRD (from scanner), and even though it was a bit choppy and it was a short in an overall up market, it worked for a late retest of the AM low. Notice the absence of any significant counter-trend impulse in the bear flag (15min and 5min charts). It also helped that the bear flag formed near the ORL and below the PDL.