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Noel Campbell In the last edition of Trading Tutors Newsletter when I penned an article, I wrote about a short trading opportunity of NAB. Well, the truth of the matter is, since that time the stock has continued to rise, rise and rise again. The miscalculation has come about due to the fact that NAB goes ex-dividend on 2 June and people buy stocks for the dividend. Those trading CFD's need to be aware that you are liable for the dividend once declared if you are currently in a short position. However, the upside is that the stock typically falls by the amount of the dividend or more and everything comes out evenly in the wash up.
Once you have set your sights on stalking a stock, or any market for that matter, it pays not to take your eye off the ball if the initial set-up scenario doesn't eventuate. That's not to say you should get pigheaded about a trade or point of view. NAB has continued to rise, and is now approaching an extremely important old top of $32.12. The good news about the recent rise and our trade set-up is that no entry triggers were given until early this week, where you might have incurred a small loss depending on the position of your stops. At times you need to be able to just dust yourself off and get back on the horse.
In Chart 1 I have the daily bar chart for NAB over many months, highlighting the level of the old top at $32.12, which occurred in early March of 2004. Why I say this is an extremely important top is due to its position in the most important Permanent Square Overlay for NAB, which is the Square of 245. We recently discussed the potential power of this latest set-up at the most recent Gann Mastery Seminar in Brisbane just last week.
Chart 1
click chart for more detail
Both the old top of $32.12 and the currently pending set-up for a Double Top are what are known as ‘Weak in the Square'. Using Squares to judge positions of strength and weakness and gaining a clear understanding of how this concept is applied is one of the greatest revelations for many of the students who attend Gann Mastery. Understanding how to use Gann's Squares in your trading is very much a skill acquired over time. David Bowden refers to Squares as an acquired taste, much like oysters and avocadoes.
I have confidence in this latest set-up and am excited about the opportunity it presents. Investigate this set-up for yourself and for those who are contemplating the value of such a trade I trust this gives you a taste of what can lay ahead for you as professional Gann traders.
Until next time......
Noel Campbell
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