Gapper - Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

RIMM - Contraction precedes expansion.

Technical Picture - Bears Own It

A sharp bounce in the $USD and much weaker than expected existing homes sales data, gave the bears the fuel they needed to push prices lower on high volume for a second consecutive session. Next support level around $104.00 - will it hold on closing basis tomorrow?

After hours, RIMM beat by $0.03 and issued in line guidance. As noted last night, that wouldn't cut it this time round and the stock was crushed after hours, leaving the daily chart completely broken.

$USD versus $CAD

DOW transports approaching critical test of trendline near-term.

Technical Picture - Sell the News - FOMC Policy

The FOMC finally came out with a more optimistic statement regarding the recovery "economic activity has picked up following its severe downturn", but market participants reacted by selling the news.

The daily SPY chart signals that despite numerous attempts, we can't close above the Lehman gap open. Bearish gaps act as resistance and this one is typical thus far. Today's close is the first close below the daily 5 EMA since early September. The post FOMC sell-off was decisive, so expect that correction I've been anticipating to start now.

The weak dollar has been the major catalyst behind the last leg of the rally. The chart above and below foreshadow a pullback. The dollar looks like it wants to bounce here.

If the $USD bounces, oil will fall out of the box.


Textbook shooting star reversal on the SPY post FOMC. Notice how it retested last week's high, carved out a shooting star and swooned on accelerating volume. Sweet!

RIMM was an ambush setup following early strength (TI momentum scan).

RIMM reports earnings after the bell tomorrow. These are highly anticipated since it broke out of a symmetrical continuation triangle earlier this month. However, the BO volume is lame.

RIMM needs a big beat to justify current price. A big beat will likely complete the gap fill, however, just meeting the expectation will result in a failed pattern.

Technical Picture - Lehman Gap Still Holding as Resistance

Lehman gap is still holding as resistance as we head into the FOMC interest rate decision tomorrow.


AIG was forming a bearish h pattern when I spotted NRIB NR7. Price started to retrace when it retested the morning lows, but the move turned out to be an ambush - 50% retracement of last leg down. Finally, in the last hour it ripped lower on a rumor of a secondary offering.

CNQ gapped and formed a mini inverse H&S pattern. I pulled my stop on the second half at the last minute because the rising 50 SMA was just below. It held as support and price rallied to new session highs, but failed to reach full extension despite the daily breakout to new recovery highs.

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Potash Corp./Saskatchewan (USA) (Public, NYSE: POT) - Revised Guidance

Potash shares (POT 93.34, -3.80, -3.91%) dropped 4.2% to $93.05, while Mosaic (MOS 52.95, -1.30, -2.40%) fell 3% to $52.60 in late trading.

Potash said late Friday that it expects fiscal full-year earnings of $3.25 to $3.75 a share, down from a previous forecast of $4 to $5 a share. Analysts polled by Thomson Reuters were forecasting $4.16 a share for the year.

"The change primarily reflects lower than forecasted potash sales volumes due to continued slow demand and limited restocking by fertilizer distributors around the world," Potash said in a statement.

Potash also expects third-quarter earnings to come in at the low end of a range of 80 cents to $1.20 a share. Analysts are looking for 93 cents a share from that period.

Edit:

I've added the 15 min. charts for POT and MOS below with support/resistance levels (blue lines). If a low risk entry sets up at or near the S/R levels, I'll take the trade. MOS is more likely to trade in sympathy with POT than the other names in the agchem space. An entry for MOS would be between $53 and $52.50.

OPEX Trades - VistaPrint NV (Public, NASDAQ:VPRT)

The first chart is a stretch version of our gap resistance which we noted over the last couple of posts. We'll monitor it daily to see how it plays out.

OPEX is notorious for chop, so if at all possible, we want to focus on stocks trading outside of the previous day's range. Both VPRT and ILMN printed on the TI momentum scan in early trade.

VPRT was not obvious at first because it had so much congestion at the top of yesterday's range, but when we formed a base at that level, it looked compelling as an extension trade. The thick red line is the all time high prior to today.

If we consolidate in the upper range, we may get more mileage out this name. I'm adding it to my focus list.

ILMN - basic low risk entry , but not enough volume after yesterday's big move for a full extension.


CLF is one of my usual suspects and depicts typical OPEX trade - within a narrow range for most of the session. Last hour these usually break one way or the other.

The wider range view of CLF shows a H&S top after a sizable run. Could be a good candidate for next week.

Technical Picture - Gap Resistance In Play

I'm posting this SPY gap chart again tonight. I'm calling it the Lehman gap, but in fact it occurred about two weeks after the Lehman bankruptcy as the world financial crisis was gathering momentum. Today's spinning top edges into the gap, but closes at $107.16 (base of gap). Technically speaking, this gap is significant and will remain as such until it is filled.

Tomorrow is triple witching OPEX, but if we break below today's range, it could be good trading.


Transports appear to be forming a bearish rounded topping pattern.

Couple of stocks I picked off of the Trade Ideas momentum scan as longs earlier this week are now perfect candidates for shorting because they're so overbought. ASH from Tuesday and CMA from yesterday.

Technical Picture - SPY - Weekly Gap Resistance In Play

The SPY's bearish gap resistance from last October is in play. You may have noticed that the markets started to get really choppy in late afternoon. That's triple witching OPEX starting to kick in.

Technical Picture - New Recovery Highs (Again)

Today's extension to fresh 11-month highs reflects continued momentum/short-covering off of yesterday's reversal higher, after today's initial pullback proved once again to be short-lived. The dollar initially tried to rally (early weakness in S&P), but couldn't hold. Bernanke's well quoted statement midday "from a technical perspective, the recession is very likely over at this point" probably helped the bulls push prices higher. Leadership was provided by commodities and industrial related groups, with a reversal lower in the dollar fueling gains in energy and metals, and new frost concerns driving the agchem complex sharply higher (see my POT trade below).

Many traders, like myself had been anticipating a more meaningful market correction, but it just hasn't materialized, as pullbacks continue to be short and shallow. Despite the overbought view of the markets, we will likely continue to drift higher until a catalyst can come up with the power to turn things around.

$USD vs. SPX sums up the technical picture.

Technical Picture - New Recovery High

New recovery highs for the S&P and Nasdaq, unconfirmed by the DOW. As mentioned in the last two posts, I think we are done and we need to correct, however, I'm waiting for a clear signal to short the market and look for shorting opps. Today, the momentum scan was quite active on the long side, so I'm not going to fight the tape.

DNDN - takeover chatter propelled the stock out of its base in early trade. A long period of consolidation made this stock attractive for the second leg up. I didn't want to overshoot the expected target so I placed my fibs from the last consolidation to the tweezer top. Price held the ambush zone as support and traded sideways, consolidating the early move through time as opposed to price.

UA gapped and consolidated in an orderly fashion. Extension stalled at 50% which was not totally surprising, given the run up in price over the last few sessions.

Technical Picture - Win Steak Ends at Resistance

As discussed on Thursday, preliminary targets on S&P have been attained and now we anticipate a retracement to either the trendline or the base at 950.


IBD says a weaker dollar and inflation fears are propelling gold higher. Really?, I thought gold bugs were pushing gold higher. The $USD chart still has me scratching my head, because lower prices are not being confirmed in the MACD.

Technical Picture - Preliminary S&P Target Attained

My preliminary target for the S&P was attained today as depicted on the chart above. That's not to say were done, we may edge higher, but I would expect some profit taking very soon. A pullback to the trendline or the base (950) would be healthy before the next leg up.

AEM broke out of yesterday's late day consolidation on the open. I waited for the pullback and jumped in. Took a partial when it stalled at $68.00 and I'm holding the balance overnight. From the 15 min. timeframe, we see that AEM looks well positioned to retest Tuesday's highs. That's a round $ level with long-term resistance, but this is a momentum play with lots of volume, so it won't surprise me if AEM can push through.

Retracement Trades - Goldcorp Inc. (USA) (Public, NYSE:GG)

GG was short at the base of the retracement zone we talked about last night in reference to ABX. I switched from ABX to GG because ABX was halted pending news and gapped much lower when it finally did open. Notwithstanding more bad news, gold in general should form a short-term bottom around these levels and we'll be watching for another long entry to set up.


The 60 minute chart of the SPY above illustrates support/resistance and congestion zones. It was clear from the lack of momentum on today's rally that resistance at $104.00 would hold. Just wait for a failure. If price holds within 2 upper blue lines, it could form an inverse H&S, and possibly break out of $104 on next test, but I'd like to see a gap fill beforehand.

On the 5 minute chart below, I missed the C&H on the way up, but I was ready to short the head fake at $104.00. Take a partial at the base of the C&H and exit balance at low end of congestion zone (green lines).

Technical Picture - Gold Pauses

Markets gapped up on a weaker $USD with energy (solar)/commodities leading the session. Gold gapped wide and participants took profits as prices tested resistance. Solar may have bottomed - FSLR and ENER had impressive runs today.


I closed my swing trade in ABX as price gapped wide and immediately started to fade. I entered long on an ambush setup, but after breaking out of the Fib. retracement zone, it started printing lower highs and fell back in. Scratch the long and short.

As you see from the wider view below, ABX is on the edge of the retracement zone so I'll be looking for a long/ambush trade to setup tomorrow. If you missed the BO last week, this could be a good opp.