I trainee stopped into my office today. “Bella I think I am looking at the charts too much. Any suggestions?”. On this blog, our seminars and public presentations we are one of the few firms that talk about Reading the Tape. Recently Stevie Cohen was quoted as saying the tape is not very useful these days. So true but intraday traders obviously trade much differently than this King of Hedge Funds. The Tape is less useful than in the past but it still has a vital purpose. One is on Opening Drive plays.

In One Good Trade I talked about the guys who shun the open because it is too hard for them. I suggest to work on adding this time frame to your quiver since their is consistent money for the right set ups. Reading the Tape skills are necessary to crush The Open. Reading the Tape skills are essential to trade Opening Drive Plays. This is a momentum play where we follow the ticks.

Enter stage right the sweet sounds of opportunity from JAZZ. JAZZ had promising earnings. It gapped up. 29 was a significant technical level. JAZZ has to hold and then trade higher right? Nope. And when it didn’t an opportunistic Opening Drive Play materialized. This is not rocket science. If you need to be intellectually stimulated via every trade surf on.

Below 29, after a gap up, with initial weakness on the tape, is smack the bids and play the downside momentum. If the stock slows on the tape, stops trading lower, then cover and reevaluate. When JAZZ paused, did not trade much higher, and then made a new low, then it’s on again with the Opening Drive Momentum Play. Whack the new low and cover when JAZZ stops going down on the Tape.

How fast should JAZZ go down? What does slowing on the Tape means? When to cover when the Tape slows is when? This is a skill possessed by Opening Drive momentum players. Jazz was pitch perfect down for Opening Drive virtuosos.

So trumpet another round for the skilled tape readers. Still not convinced? I blow the horn for the Opening Drive in FCX.

Mike Bellafiore
Author, One Good Trade