Fifteen-Minute and Daily Bar Charts

You will use a 15-minute bar chart to confirm the trend and, in some

cases, patterns in five-minute charts. Anything beyond 15 minutes

is too far removed from the volatility of the stock to be of any real

use to an intraday trend trader. By using a combination of the 5-

minute and 15-minute charts, you gain a more accurate picture of

trend, trading range, support and resistance, and momentum

strength. I also suggest that you display a daily chart showing at

least three months or more of data. This keeps you focused on the

long-term trend. It also helps you maintain your sanity when a stock

is volatile and you need to be focused on the major trend. Lack of focus on the major trend is one of the biggest problems with shortterm

traders. Never forget that your success will depend on identifying

the major tend of the stock you are trading. This is true for all

traders and aggressive investors. We all live or die depending on the

direction and strength of trend.

The trading day begins with a look at the trend direction of the

markets. I suggest that you use a five-minute chart, because you

want your stock charts and the market charts to be in sync. This

will quickly alert you to a stock that is trading countertrend. If you

examine the chart of the S&P 500 in Figure 6.1, you will see a strong

uptrend that continued all day. As you see in Figure 6.2, the Nasdaq

matched the S&P with a strong uptrend. If you have selected a stock

that has a high correlation to the movement of the S&P or the Nasdaq

you would want to enter the trade intraday when the index is

trending as it is in this example. I suggest you display the S&P 500,

the Nasdaq, and, if possible, the Dow Jones Industrials on one of

your computer monitors. This will enable you to determine the

trend of the markets at a glance. Think of the indices as magnets

that attract and repel stocks. This is a force you want to be in sync

with. At the same time you are looking at major indices, you will want to identify whether one sector is more active than another.

The screening and selection process you ran the night before

should identify sectors that are in play. The first 10 to 15 minutes of

the market day should reveal the opening trend and whether the

sectors you identified are in play. Do not buy in on the open because

you have no idea of the true strength or direction of trend. I do not

care what the futures are telling you. I have witnessed more money

lost by traders trying to "jump the open" than by anything else. Do

not be lured into this traders trap. Wait until you get a fix on the

trend and only then enter the trade. There is nothing more demoralizing

than starting off your day with a huge loss. Remember, you

are not a gambler; you are a high-probability trader. Let the scalpers

become demoralized and whipsawed on the open.

Many times, the S&P 500 and the Nasdaq will trend in different

directions. You want to identify these times as well as the times they

are trending in sync with each other. When they are in sync, as

shown in Figures 6.1 and 6.2, finding a stock that has a sustainable

trend is usually not difficult. Strong-trending broad-market rallies

are one of the things that a high-probability trader looks for. Let us examine the technical factors in the following two high-probability

trades. The first trade we will examine is shown in Figure 6.3, Intel

Corp., which is traded on the Nasdaq.

The Nasdaq and Intel were in a consolidation pattern. At the

same time, the S&P 500 opened higher and then began to trend

lower until about 10:15 A.M. At 10:20 A.M. the Nasdaq market began

to trend higher, and Intel broke through its trading range. The S&P

500 also began trending higher. At this point, both markets were in

an intraday uptrend, with Intel moving higher as well. The fiveminute

chart showed that Intel had broken out of its trading range

and was now trending higher. One of the techniques used by a highprobability

trader is to look to the 15-minute chart to confirm the

trend of the 5-minute chart. The 15-minute chart clearly showed

that Intel was breaking out of a small, wide-based symmetrical triangle

formation. This formation was not evident in a five-minute

time frame. The 15-minute bar of the breakout had a high-low range

that was equal to the first bar of the triangle. This was very bullish

and was followed by another 15-minute bar that had a higher high

and a higher low. The 15-minute chart confirmed the bullish breakout

of the 5-minute chart. This bullish uptrend became parabolic 25

minutes after it began, and 10 minutes later it began to reverse. Remember that on average a strong bullish trend will move in one

direction for 20 to 35 minutes, in some cases for one hour. This

intraday trade was profitable, as Intel moved from an entry at $82 9/16

to an exit at $84 1/8. Later we will discuss the use of the one-meinut

momentu m indicator in the entry and exit process.

Figure 6.4 shows the 15-minute chart of Intel Corporation. Note

the parabolic run and the lost momentum.

About the same time, in another market, Motorola was moving

in sync with the bullish trend that began the market day. The fiveminute

chart in Figure 6.5 shows Motorola moving from $89 1/4 to $90 5/8

in 25 minutes and reversing at that point. The price run was of an

extreme parabolic nature. Again, the 15-minute chart confirms the

5-minute chart and shows the upward advance of the stock beginning

to slow. At the same time, the S&P 500 is moving higher, but

Motorola is not advancing in price, and the one-minute momentum

is becoming very bearish, showing a large volume of selling by

traders. The decision is based on price action to sell the stock at

$90 1/4. Figure 6.5 shows the 5-minute chart on Motorola, and Figure

6.6 shows the confirmation of the 15-minute chart.

You will use a 15-minute bar chart to confirm the trend and, in some

cases, patterns in five-minute charts. Anything beyond 15 minutes

is too far removed from the volatility of the stock to be of any real

use to an intraday trend trader. By using a combination of the 5-

minute and 15-minute charts, you gain a more accurate picture of

trend, trading range, support and resistance, and momentum

strength. I also suggest that you display a daily chart showing at

least three months or more of data. This keeps you focused on the

long-term trend. It also helps you maintain your sanity when a stock

is volatile and you need to be focused on the major trend. Lack of focus on the major trend is one of the biggest problems with shortterm

traders. Never forget that your success will depend on identifying

the major tend of the stock you are trading. This is true for all

traders and aggressive investors. We all live or die depending on the

direction and strength of trend.

The trading day begins with a look at the trend direction of the

markets. I suggest that you use a five-minute chart, because you

want your stock charts and the market charts to be in sync. This

will quickly alert you to a stock that is trading countertrend. If you

examine the chart of the S&P 500 in Figure 6.1, you will see a strong

uptrend that continued all day. As you see in Figure 6.2, the Nasdaq

matched the S&P with a strong uptrend. If you have selected a stock

that has a high correlation to the movement of the S&P or the Nasdaq

you would want to enter the trade intraday when the index is

trending as it is in this example. I suggest you display the S&P 500,

the Nasdaq, and, if possible, the Dow Jones Industrials on one of

your computer monitors. This will enable you to determine the

trend of the markets at a glance. Think of the indices as magnets

that attract and repel stocks. This is a force you want to be in sync

with. At the same time you are looking at major indices, you will want to identify whether one sector is more active than another.

The screening and selection process you ran the night before

should identify sectors that are in play. The first 10 to 15 minutes of

the market day should reveal the opening trend and whether the

sectors you identified are in play. Do not buy in on the open because

you have no idea of the true strength or direction of trend. I do not

care what the futures are telling you. I have witnessed more money

lost by traders trying to "jump the open" than by anything else. Do

not be lured into this traders trap. Wait until you get a fix on the

trend and only then enter the trade. There is nothing more demoralizing

than starting off your day with a huge loss. Remember, you

are not a gambler; you are a high-probability trader. Let the scalpers

become demoralized and whipsawed on the open.

Many times, the S&P 500 and the Nasdaq will trend in different

directions. You want to identify these times as well as the times they

are trending in sync with each other. When they are in sync, as

shown in Figures 6.1 and 6.2, finding a stock that has a sustainable

trend is usually not difficult. Strong-trending broad-market rallies

are one of the things that a high-probability trader looks for. Let us examine the technical factors in the following two high-probability

trades. The first trade we will examine is shown in Figure 6.3, Intel

Corp., which is traded on the Nasdaq.

The Nasdaq and Intel were in a consolidation pattern. At the

same time, the S&P 500 opened higher and then began to trend

lower until about 10:15 A.M. At 10:20 A.M. the Nasdaq market began

to trend higher, and Intel broke through its trading range. The S&P

500 also began trending higher. At this point, both markets were in

an intraday uptrend, with Intel moving higher as well. The fiveminute

chart showed that Intel had broken out of its trading range

and was now trending higher. One of the techniques used by a highprobability

trader is to look to the 15-minute chart to confirm the

trend of the 5-minute chart. The 15-minute chart clearly showed

that Intel was breaking out of a small, wide-based symmetrical triangle

formation. This formation was not evident in a five-minute

time frame. The 15-minute bar of the breakout had a high-low range

that was equal to the first bar of the triangle. This was very bullish

and was followed by another 15-minute bar that had a higher high

and a higher low. The 15-minute chart confirmed the bullish breakout

of the 5-minute chart. This bullish uptrend became parabolic 25

minutes after it began, and 10 minutes later it began to reverse. Remember that on average a strong bullish trend will move in one

direction for 20 to 35 minutes, in some cases for one hour. This

intraday trade was profitable, as Intel moved from an entry at $82 9/16

to an exit at $84 1/8. Later we will discuss the use of the one-meinut

momentu m indicator in the entry and exit process.

Figure 6.4 shows the 15-minute chart of Intel Corporation. Note

the parabolic run and the lost momentum.

About the same time, in another market, Motorola was moving

in sync with the bullish trend that began the market day. The fiveminute

chart in Figure 6.5 shows Motorola moving from $89 1/4 to $90 5/8

in 25 minutes and reversing at that point. The price run was of an

extreme parabolic nature. Again, the 15-minute chart confirms the

5-minute chart and shows the upward advance of the stock beginning

to slow. At the same time, the S&P 500 is moving higher, but

Motorola is not advancing in price, and the one-minute momentum

is becoming very bearish, showing a large volume of selling by

traders. The decision is based on price action to sell the stock at

$90 1/4. Figure 6.5 shows the 5-minute chart on Motorola, and Figure

6.6 shows the confirmation of the 15-minute chart.