Boy was this morning some kind of explosive rally. It was a nice, tight, & controlled rally for the first 15 minutes, but the last 3-5 showed the classic signs of an exploding top.

I want you to take a close look at the 55=tick chart on the left and sear that image into your mind. Specifically notice the parabolic move at the end (marked with the red line) and how it differs from the controlled rally up to that point. Whenever I see this kind of a move after an already extended rally, I will fade it 100% of the time expecting some sort of correction to be soon coming.

Now take a look at the volume on the 2-minute chart. We were 20 minutes into a nice, strong uptrend with virtually no pullbacks. The volume was solid but not yet explosive. But then BAM, at 9:58 the volume jumped over 3x that of the previous bar. I was tempted to jump in short at the end of this bar but a closer look at the 55-tick chart was still showing a fairly controlled move up. Such tight, continuous unidirectional movement can often continue for greater than expected periods of time.

Boy am I glad I waited because the next 2-minute bar was even greater than the last and I finally got the explosive, parabolic move on the 55-tick chart that usually only appears in my dreams. I made up my mind to short the very short-term price reversal on the 55-tick chart and got in at 805.30. To add even more credence to the play, the NYSE-TICK was putting in a double top of its own.

Not long after that, my trade was in the green by over a point. But here’s where I started to slip up a little. My initial target was looking for a pullback to the rising 610-tick trendline. Not wanting to be greedy, I placed my exit point midway between the most recent pivot high and the trendine at around 803.50. (This would also have been an FFF1 reversal point as well).

But price never made it. And instead of exiting around break even when the 55-tick TXD+ reversal signal fired off, I left my stop just above the most recent high. It wasn’t necessarily a bad play, but it cost me an extra 7 ticks more than if I had been smarter and conceded that my target was most likely not going to be hit.

I was able to make it al back on the next play with the volume divergence & 610-tick TXH- so in the end, everything worked out very nicely.