This morning we noticed that shortly after the open CF hit my new low of the day ticker. Hmmm…a market leader getting sold right away into a gap up in the SPY and continued strength in the SPY. I took “Notice”. A little later we see it again, this time joined by MOS, AGU and some others from the sector. It’s time to “Explore”. We now start to drill down into the action on the tape. We see a buy program fire up in the SPY but no juice to the upside in this sector. These high beta stocks usually react with a vengeance if you are on the wrong side of a program. So we have the SPY to new highs but this bunch languishing. It’s time to “Execute”. Yes it was time to short these with well defined risk and really start to gauge the reaction if and when a sell program comes. The heavy reaction to a buy program that put the indices at highs gives the confidence to go for it.

Notice the things that don’t quite fit, explore them then execute the trade. If you do this often enough using the information the tape provides you will exploit a few of them. Look for a screen cast later on this post.

Jeff Davis @Shaq48_Trading [email protected]