Technical Picture - Choppy Week Ends Unchanged

As we can see form the 15 minute chart of the SPY above, despite two attempts to BO, the week ended almost unchanged. We carved out a series of dojis on the daily, implying indecision. The Nasdaq continues to outperform. We note more distribution on the SPY, however, weakness continues to be bought. Therefore, we can't conclude anything bearish from this week's action.

Reaction to U.S. elections and FOMC policy statement will be interesting. Jobs data on Friday will no doubt be an important factor.

Some companies of interest reporting this week:

Monday: ACOR, AGN, BHI, CTSH, CTB, ICE, JKS, APC, ESLR, EXTR, WFR, NTRI, and VMC.
Tuesday: ADM, BP, CLX, COCO, K, NYX, CECO, CQB, ERTS, HTZ, LEAP, MYGN, TEVA, OPEN, STEC, and WYNN.
Wednesday: ANR, ASCA, CVS, GRMN, JRCC, MGM, TAP, Q, TWX, CELL, FRPT, ROCK, JCOM, QCOM, MELI, MUR, PRU, SWIR, THQI, WBMD, and WFMI.
Thursday: APA, BDX, CVC, CBOE, CCOI, DTV, RAIL, PCS, ZEUS, SMG, TWC, UPL, USM, WWE, AMLN, BEBE, NILE, CEDC, CF, FLR, FTEK, HANS, JDSU, MCHP, SBUX, and SVNT.
Friday: BZH, BAM, CEP, DISH, SATS, FIG, FWLT, FCN, NVAX, PXP, SOL, and YRCW.

The $USD tried to rally from minor support, but now looks poised to retest the lower channel.

GLD looks bullish after some backing and filling. Weakness in the $USD will no doubt fuel a retest of the recent highs. Silver has already retested and broken out.

Oil could retest $87.00 on a weaker dollar, but the chart is less compelling.

Negative divergence of RSI to higher prices in corn futures, foreshadows the end of the move is near.

Materials holding up, but banks still look vulnerable.

Technical Picture - Solid Recovery from Intraday Lows

Markets gapped down on the open amid concerns over Euro debt issues, $USD upticks, and weaker durable orders x-transports (-0.8% vs. consensus +0.2%). The SPY held near last Thursday's lows. As we can see from the 5 minute chart below, the SPY printed a lower low in early afternoon with positive divergence of the RSI, which triggered a long. The dollar index pulled back during the afternoon after stalling just shy of its Oct high, prompting the rebound in equities to take hold. The Nasdaq outperformed the broader markets with strength in Semi (SMH +2.2%), Networking (IGN +1.7%), Software (IGV +0.6%) and Biotech (BBH +0.6%) and managed to finish green on the day.


FFIV earnings gap. On the daily we reached the 1.27 Fib. level of the recent recovery. Next target is 1.618.

Because the markets were weak, I decided to enter long from support rather than trade it as a BO long as I usually do. Good thing. because it failed about 1 pt. into the move and slipped back under $116.00. Eventually, it established another base for a second long.



LRCX is well on its way to the 1.62% Fib. extension. Over the previous two sessions, it had carved out a base. After the initial thrust and breach, it retraced 50%, allowing for a decent entry. It managed to hold support and eventually retested the highs, scalloping its way higher. When it took out the 1.27% FE, it rallied quickly to the 1.62% level.

RIMM broke out and followed through on huge volume yesterday. Today it consolidated in the upper range of Tuesday's WRB. I'm targeting $58-60.00

ISRG, one of the weaker stocks on my watchlist, set up a nice bear flag after gapping down, with the markets on the open. The solid recovery off of the morning lows, leads me to believe, it has double bottomed near term.

I posted about BIIB before it BO of its daily base. I've had a couple of decent day trades since then, but today I missed the sweetest. I didn't spot it until it was well underway and didn't want to chase.

Which brings me back to CELG and AMGN. They still look good for further upside. AMGN had a little earnings setback, but it's holding support. Add these to the WL.

This is a weekly chart of BRCM. High volume earnings gap on the daily. I think it can go back up to $50.00 as long as the market rally continues.

Apple Inc. (Public, NASDAQ:AAPL) 10K Filing Lowers Gross Margin Forecast to 36%

AAPL saw some selling in AH on gross margin comments in 10-K filing. They see Q1 gross margin at 36% vs. 37.5% consensus. "The Company expects its gross margin percentage to decrease in future periods compared to levels achieved during 2010 and anticipates gross margin levels of about 36% in the first quarter of 2011. This expected decline is largely due to a higher mix of new and innovative products that have higher cost structures and deliver greater value to customers, and expected and potential future component cost and other cost increases." Consensus calls for 37.5% in Q1, up from 36.9% in Q4.

As you can see from the chart above, prices quickly swooned to $304.00 when that news was released, but have since recovered back above today's regular session lows.

On the daily timeframe, we see three key levels of interest, interim resistance at $315, support at $300 and 20 ema, followed by former resistance at $294. A retest of the psych level $300 will probably bring in buyers. The gross margin issue, might force that level, sooner than later. We'll see how it opens tomorrow.

Before reading the 10k filing news, I had mapped out current levels of interest on the 15 minute chart below.

Day Trades - RIMM NFLX MOS CMG FFIV WYNN

As noted yesterday, RIMM had broken out of a multi-month base. Today, I placed a buy stop order above yesterday's high. Took a partial at the 62% Fib. extension. The balance ran up to 150%. The last 50% of the move was euphoric as we can see from the volume.

On the 15 minute timeframe below, we see that RIMM breached the top of the upper BB on a euphoric volume spike, marking the end of the move. Like capitulation, this is a tradable reversal setup.

Short RIMM on 1 minute timeframe.

NFLX and MOS were HCPG picks from last night's newsletter. I wasn't in love with the NFLX setup until it printed a NRIB - NR7, one of my favorite entry points. Price/volume contraction ahead of expansion.

MOS was entered on the pullback.

CMG took out post earnings gap highs, formed a base for the next leg up. I'm posting both the 5 and 15 minutes.

FFIV - Fib. retracement trade on 5 minute timeframe.

WYNN - Failed setup.

Technical Picture - New Multi-Month Highs

Early strength peaked about 30 minutes into the session. The DOW did not confirm a new recovery high as per the DOW Transports. As depicted on the chart above, we were about 10 pts. shy of the April high. Non-confirmation often precedes a pullback.

The second point of interest is the weekly chart of the S&P. Here we have the 200 SMA acting as resistance. Too early to tell if this is significant.

The SPY daily is just shy of the 62% Fib. extension of the June-Sept. base.

In order to continue higher, we need some participation from steel and financials. Steel is more likely than financials, as the banks looked poised to break down from bearish flag pattern.

Oil has carved out a solid base and continued weakness in the $USD could see oil retest recovery highs.
The chart below is a weekly chart of the $USD. So far the lower trendline is holding, but if it gives way, we have a very important pivot at $74.00 (red arrows), which will likely result in an oversold bounce.

The longer term forecast for the $USD is nebulous given the lack of details and potential impact of QE2 easing.

IBM is setting up an ambush short. Price retraced 62% of the reaction leg lower following earnings. Failure to close above the 62% Fib. level leaves the door open to some selling. Intra-day trendline was breached going into the close today.


SNDK - Failure to break and hold above the base, followed by a retracement back to lower trendline post earnings, looks bearish.

Day Trades - LRCX, ISRG, FFIV, SOHU, TIBX (HCPG)

LRCX - Failed BO on Thursday, turned into a big winner on Friday. I should have been on this one on the open because from the daily, we can see that Friday's close edged out of the base and follow through was expected. I had too many names on my focus list this morning and couldn't get to LRCX in time.

ISRG - Big winner on Friday. Today it tried to follow through but failed, setting up a short. Slippage on the fill, but it worked anyway.

FFIV - Friday in sympathy with RVBD, a cloud name that reported strong earnings. Using Fib retracement to find an entry after the initial thrust on the open. According to Ratio Trader, if price can close above 1.27% extension, it has a good chance to move to 1.62%. FFIV couldn't close that scenario, but I worked it on the pullback to support.

Watch the Fibonacci Ratio Analysis program on stock twits TV.

SOHU was a gapper with big volume. I waited for price to find support after the intial gap and go. Once it became obvious that the 38% Fib. retracement level was going to hold, I went long. Price stalled at the 1.27% extension, but here again, I was able to play the support back to the base.

TIBX was a HCPG setup from yesterday's newsletter. It had edged out of it's daily base on Friday, so I had to trade this one on the open.