Swing Trade Update / Gold - $USD Technicals

POT reported strong Q2 earnings and had an upbeat conference call regarding supply/demand issues which are improving - inflection point is near, which it describes as a point where demand reemerges, supply tightens, and pricing opportunities return. Recent supply and demand developments are favorable. In Russia grain production is expected to decline by around 20%. While Canadian wheat production is forecast to be down 23%. China which places a priority on food self sufficiency is facing significant challenges as a result of adverse weather and nutrient imbalances.

As depicted on the chart above, we can now draw in a trendline because POT broke out of its base and printed a new high. Next resistance level is the 200 SMA. Today's volume spike is very bullish as well.

Day Trade - POT retraced and carved out a bullish hammer reversal stick just below the ambush zone. Normally, we prefer that price close within the ambush zone, so in this case, we have to wait for confirmation. Enter long above the base (blue line segment), partial at the weekly pivot R2. Price rallied just shy of the full fib. extension.


ABX had strong earnings and increased the dividend by 20%, so price gapped on the open. I didn't panic and cover my short because GLD was weakening in pre-market. I placed a stop at 62% fib. retracement of last leg down as depicted on chart below. When price filled the gap and reversed, I covered half my swing short.

We'll see how this plays out. Price closed just below daily 200 SMA.


USD and Gold Weakness:

The $USD is trending lower and will likely remain weak until the economic data, and more specifically, the employment data shows a meaningful improvement. However, we are extremely oversold, in a congestion zone, approaching the 200 SMA. So, expect a technical bounce back to the trendline in the near-term.

The last chart shows the $USD (red) vs. GLD (pink). During the crash the $USD was a hedge against falling stock prices. During the recovery, GLD was a hedge against the falling $USD. Earlier this year, the $USD and GLD started trading in the same direction as a hedge against a falling $Euro. This last hedge is out of favor because the $Euro is making a strong recovery.

The gold hedge vs. the $USD will likely come back into play if the slide continues. We just have to monitor the charts closely for any tells.

Swing Trader - Barrick Gold Corporation (USA) (Public, NYSE:ABX); Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

Two swing trades short ABX. The first was a short following failure to BO on test of previous high. We noted on July 6th that the gold hedge against a weak Euro was out of favor because the Euro reversal had proven quite strong. I waited for price to retrace 50% and I covered as price approached 200 SMA.

The second trade, depicted below is the same principle, 50 % retrace of last leg down (points A to B). Now price has taken out the 200 SMA and we are targeting point C - 50% extension. ABX reports tomorrow in pre-market. I hope price will not regain 200 SMA, but if it does I will cover half.

POT is a swing long, the day after markets reversed. I sold half today as price retested the base ahead of earnings tomorrow morning. I'm not optimistic on favorable earnings, but I think the bottom is in and the sector will continue higher based on crop commodity prices and severe global weather conditions.

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Technical Picture - Laggard S&P captures 200 SMA

The markets extended last week's advance with the laggard S&P finally closing just above its 200 SMA (NASDAQ, DOW and INDU achieved that milestone on Friday.) We've also retraced 50% of the May-June slide.

Biotechs have been pacing the way higher with M&A chatter ( SNY for GENZ). Last week I posted the GENZ daily chart before Friday's BO. Hope you guys caught this one. I traded it Wednesday earnings C&H pattern and again Thursday and Friday. Today I traded BIIB. The takeover is hostile and large caps such as CELG and BIIB are rallying along with GENZ as possible takeover targets if the GENZ deal fails.

AAPL setting up for expansion with 3 NRIBs since the earnings gap. Today's stick is NR7.

NFLX earnings gap extension and an identical trade again today. BOX trade - next test of support should break.

Also watching Ag/chem. POT daily shows price consolidating and could break higher anytime now.

Technical Picture - Trendline Resistance Holds

The U.S. markets were able to build on the momentum generated by the previous session's strong reversal in opening trade amid some favorable earnings reports from AAPL and others, but the action quickly turned into a fading opportunity. Technically, the S&P stalled on a retest of the downward sloping trendline. See the SPY chart below - the SPY opened where Friday's sell off began. Choppy/mixed trade persisted into the afternoon ahead of the Fed Chair's testimony at 2:00 pm EST. Up until then we had been trading within the initial trendline from yesterday's reversal. The Bernanke selloff started just two minutes in as price broke the trendline and swooned.

The testimony reinforced what we already knew, slower growth than previously estimated and high unemployment over the next few years.


Euro retracing after hitting resistance and USD retracing for a retest of the broken trendline.

C&H Day Trade - Genzyme Corporation (Public, NASDAQ:GENZ)

From the daily timeframe (above) we see that GENZ has a base of resistance at $54.72 -$54.75.

On the 15 minute chart below, GENZ carved out a C&H pattern at the base of the ORH. Place Fibs from the low of the cup to the base of the handle and target a full measured move of 100%. In this case the daily resistance is just 10 -12 cents above the full move, so I let it run a bit higher. Once the extension is underway, volume should expand with price as it moves towards the target.

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

RIMM carved out a tweezer bottom reversal pattern at the base of PDL setting up an opportunity to go long. As we can see from the wide range view of the 15 minute chart above, the reversal area coincides with a consolidation zone from last week's WR reversal bar. Price rallied back up to the ambush zone (50-62% retracement). After hours tech stocks TXN, IBM, ALTH sold off on weaker than expected revenues. So, the bias for tomorrow is short tech.

The next test of this support area will setup a short for RIMM. As we can see from the chart above, there's no support beyond $52.00, so there's a 2 point short trade if RIMM retests and fails to hold this support level.

Technical Picture - Distribution Day

Bank of America (BAC ) and Citigroup (C) both beat consensus earnings per share estimates, but failed on top line revenues. That sent the banking index down 5.7% leading Friday's plunge. GOOG missed earnings altogether sending the Internet index down 3.4%. The Michigan consumer sentiment index declined as well, leaving investors heading for the exits. It was a broad based sell-off on higher volume (partially due to options expiration) with all major sectors in the red.

The banking index looks bearish with MAs converging over price. The congestion zone should provide support, but how long will it hold? Financial reform was discussed on BAC conference call with analysts - they estimate the new credit card and other rules will cost them $3.8 billion.


GOOG earnings miss provided leadership for the Internet index - down 3.4%. The NASDAQ was down 3.1% on the day but volume was just average.

Chips have been range bound since breaking the longer-term trendline. INTC earnings were very good and I'm still optimistic on the sector.

Transports sold off , but volume was just average. Still, there's nothing to indicate the trend could change any time soon.

The one bright spot that I can find is Ag/chem (MOO). Normal consolidation on Friday despite the overbought posture.

Technical Picture - Markets Mixed

The S&P broke support of its prior two day trading range with the 10:00 release of the Philly Fed data (5.1 vs. 10.1). Price swooned, but gap fill support held. Prices eventually retraced back to yesterday's range in lackluster fashion. And just when the bears regained control, heading for a weak close, news that BP had managed to stop the oil flow and that the SEC was going to release a statement (potential GS settlement), the market reversed and erased all of its losses. Hallelujah!

Futures holding up well after hours despite GOOG's earnings miss. CPI data in pre-market and Michigan sentiment at 9:55. BAC, C, and GE earnings in pre-market. AAPL conference to explain fix for iPhone 4.

Ag/Chem was the clear winner of the session with POT pacing the way. A weaker dollar contributed to the strength, but the key factor propelling Ags higher are crop futures which were solidly in the green again today. The high heat in corn growing areas is another significant factor. I never thought I'd be following crop and weather futures.



The POT entry is just above the previous two day trading range. It still had plenty of room to move prior to hitting 50 DMA as opposed to AGU which was testing 200 DMA.

Took a partial at the 100% Fib. extension.

By EOD it tagged 150% level.

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Technical Picture - Rally Testing Key Levels of Interest

Another accumulation day after a solid start to earnings season. Price is now testing the downsloping trendline and the 50 SMA.

The S&P has rallied 8.8% already this month from intraday low to high bringing the numerous technical levels of interest into play. Despite the extensive six day surge, however, the market has a catalyst after hours (INTC earnings) for further gains in early trade Wednesday. An initial resistance above is in the 1105/1107 zone with a more important area at 1112/1115 (200 SMA/50% retracement of April-July slide).

Chips stocks should rally back to the top of the recent trading range.


Euro continues to show strength vs. $USD which breached its trendline on closing basis today.

Expecting Gold to breakout on next test of trendline.


AGU - Good example of one of my favorite leading indicators - MACD divergence. Positive divergence of MACD to lower prices foreshadowed a reversal. Price reversed sharply and has come into resistance of 200 SMA. I'd like to see a shallow retracement (38%) for entry of a swing trade long.

APKT forming an ascending triangle.

Technical Picture - Reversal Day

Today's reversal comfortably recaptures the baseline of the May/June lows on higher volume which means accumulation.

We may have put in a bottom last week when we tagged the the 38% Fibonacci retracement of the March 2009 lows to the April 2010 recovery highs. That would be a normal retracement in a strong uptrend. Technically, the markets were oversold and we were due for a relief rally. The lack of news and data today, seemed to set the stage for a bounce. But, we need follow through in the coming days, in order to confirm today's action as a key reversal day. As depicted on the SPY chart below, we closed at the bearish gap resistance level. Tomorrow's jobless claims and retail sales data will set the tone.


Oversold commodities got a boost from a weaker dollar. Shorts got squeezed as the morning strength persisted into the close. MOS and MON were leaders in the Ag chem sector. MOS paused to consolidate the initial thrust, setting up a solid base for the second leg up.

Technical Picture - Former Support Acts as Resistance

The first chart is the 15 min. timeframe of the E-mini futures. The E-minis formed a bullish cup&handle overnight. The pattern reached full (100%) extension in pre-market. Despite the big move, it managed to rip an additional 50% in early trade.

That turned out to be the end of the move, because former support from the May and early June lows came into play. The bears stepped in, slowly at first, but eventually managed to push prices all the way back to the base of the C&H pattern.

So, the first test of resistance (former support) holds. Now SPY prices are trading in a narrow range between today's high and Thursday's low, which marks the 38% retracement of the March 2009 low to the April 2010 recovery highs.


The $USD is testing its trendline as support.

Gold fell sharply last Thursday. The $USD and gold were strong versus the Euro, but now that the Euro has bounced, the gold hedge is out of favor. The Euro will likely consolidate and retrace some of the move soon.



ABX testing its trendline. Bear flag developing.

AMZN - Bear flag forming.