Technical Picture - Tech Bulls Get Ambushed

Early strength lacked momentum and the bears were able to apply some pressure in the ambush zone (62% Fib. retracement of last week's sell-off). I'm looking for the correction to carve out a lower high in the 62-78% fib. retracement level. Tech and small caps are the most vulnerable as the broader market still has commodity leadership. Oil, energy and precious metals are still trading near range tops. However, we still have a lot of economic data to digest this week as tomorrow begins a new month. We'll soon see if institutions are putting new money to work for the bulls, or if they are taking a cautious approach.

My short trades performed much better today than the longs.

AKAM made a vertical move to the downside after breaching the daily bearish flag pattern.

APKT tried to extend Friday's gains in early trade, but quickly reversed, breaching Friday's late day trendline.

JDSU was a long entry that failed.

In this SU trade, I was looking for a move back up to the range top, but settled for half, because the stock spent most of the session in a tight chop.

Focus List - ACOM looks almost ready to roll over.

MGA bear flagging.

CMI is bear flagging

Technical Picture - Market Slide Continues

The market slide continued today as the "buy the dip" mentality has suddenly disappeared in the face of institutional selling or distribution. The Nasdaq chart above clearly depicts strong selling over the last two sessions. However, we are close to breaching the lower BB and short-term capitulation selling would be an opportunity for a bounce.

On the flip-side we have huge gains in gold, silver and oil. I'm monitoring gold and silver for euphoric price/volume action as these sectors over-heat and in need of short-term corrections.

Copper is another commodity of interest, as we approach trendline support and the lower BB.

Last night we talked about the Ags for a potential oversold bounce as most of the widely held names were coming in for a test of support. Also featured in HCPG newsletter last couple of nights for added confidence. As depicted on the daily chart above, CF corrected well beyond the lower BB.

On the 15 min. chart below, we see that price/volume capitulated after breaching weekly S2 (tweeted at 12:12 if you were able to decipher the spelling error). The recovery was slow at first and normally, when stocks capitulate, I expect a V bottom. However, patience paid off, because once price manged to break above weekly S2, it went vertical. I took a partial as price approached the downsloping 50 SMA and exited the rest at the next resistance level.

Similar trade in POT in my swing account. Here I waited for price to form a base before jumping in. My target on the swing is the unfilled gap. I will add to the swing if we retrace some of today's gains. Stop at BE.

BTW, NYSE POT 3 for 1 split on Friday.

Technical Picture - Bears in Control

The first chart is a wide range view of the S&P emini futures. We note yesterday's trendline breach and close near LOD. Today we gapped lower on accelerating mideast tensions and inflationary fears out of China (gold, silver, oil gapped higher). The gap was quickly filled, however, if we zoom in on the next chart below, we see that price couldn't close above the 5 day MA (orange), and hence, the downtrend resumed.

Next support zone is 1309-1305. Next resistance is around 1325. If this is a bona fide correction, I would use the downsoping 50 SMA on the 15 min. timeframe as a guide. In other words, it should hold as resistance just like the 5 day MA did this morning.

The Ag sector continued to correct again today. As we can see from the 30 min. chart of POT below, we achieved a full measured move on the H&S top.

On the POT daily timeframe, we have a broken trendline, but we do expect price to retest the trendline and fill the gap. Keep an eye on grain futures (wheat testing support zone). Once they stop bleeding, we should get a tradable bounce in the Ags.

POT day trade.

Also, traded AGU.

I still have my eye on JDSU. I'm watching the gap $23.50 - 23.00 for a support trade.

TCK was a nice short out of the bear flag pattern, but now it's approaching a support zone, so we want to keep it on the focus list for a bounce.

Technical Picture - Index Futures Plunge on Escalating Mideast Tensions

Index futures plunged today as tensions escalated in the middle east. Fear of civil war in Libya after 300+ demonstrators were shot and killed have stoked gold and silver futures higher. Oil futures are also on the rise.

Expect increased volatility when markets open tomorrow.

This week's economic calendar

Day Trade - CLF offered another low risk shorting opp as it based along PDL. The only caveat to the setup was the rising 50 period SMA on the 15 min. chart above. The price/volume contraction at the base foreshadowed expansion. Worked better on Friday than Thursday because of the coiling.

Day Trades - TCK, CLF, TBL

Bear flags have been hit and miss in this market. Mostly they've been fake outs. So why was TCK a good short? From the daily chart above, we noted a huge volume spike on the Feb. 9th drubbing. So we see a huge red stick with volume, plus bear flag with NRIB observing the downsloping 5 ema as resistance closing at the base of support. This bear flag felt like it could work.

Small size on break of $58.00 and added at the first consolidation BO. Took a partial after 3 consecutive WRBs on 15 min. timeframe (not depicted). Got stopped on balance as price capitulated into $56.00 and bounced.

CLF gapped up on earnings. Price chopped around in the first hour and then started basing in an increasingly narrow range, forming a flat base at $99.50, and setting up a gap fade.

Price breaks down, retests the base and runs lower for 3 consecutive 15 minute bars. Take a partial as price approaches $98.00. CLF snapped back sharply. I thought the second half was going to get stopped out at BE, but, it came back down and I was able to salvage a decent profit on the second half.

Looking back at the 15 minute chart, there just wasn't enough volume expansion on the initial leg lower to expect continuation.

TBL was another earnings gap from the Trade-Ideas scanner - gap up min. $1.00, RSI on 15 minute timeframe minimum 60.

TBL gapped and ripped then spent most of the rest of the session in a tight narrow range. Normally, I like to buy the BO of the upper range, but time was of the essence, so I decided to buy the bounce off of the bottom of the range, then if the BO failed, I would have some profit from the trade. Turned out to be a good strategy as price/volume expanded into the close. The base BO also set up perfectly with a low risk NRB on the 15 min. timeframe.

Entry and exits depicted on 1 minute chart below.

Cup & Handle - BWLD

Good, low risk setups were hard to come by today. The momentum names, for the most part took a breather, and many gappers were faded.

BWLD, which I mentioned in last night's post, set up as a textbook cup & handle pattern. Price/volume contracted as the handle formed. This contraction foreshadows expansion and BWLD delivered a full measured move.

Technical Picture - Small Caps Lead as Markets Extend Rally

Small caps recently corrected to 50 SMA. Friday they provided leadership. As noted on Thursday, the situation in Egypt would affect trade. After testing and holding support, the markets retested resistance and rallied on news that the Egyptian President had stepped down.

On the Emini futures chart above we see that the uptrend continues after two tests of the trendline on Thursday and Friday.

On the SPX chart above we see that our measured move target was met on Friday. I've adjusted the pivots to take into account Thursday's dip. The new target would bring us to the 1342 level.

JDSU - huge volume on this extension. Keep on the WL. Shallow pullbacks are good buying opps.

I missed the early run, but managed to catch the last leg up on Friday as JDSU consolidated a printed NR7.

TUP was on our focus list. Price gapped and retested the base, so I entered long. Choppy until it formed a handle and extended higher. Hard to move the initial stop until the handle broke.

GMCR, another runner, flagged for a low risk entry point.

CELL - I felt that I had traded this one badly, but I think it was just a failed BO. Best not to trade small caps on 15 min. timeframe.

ISRG was a HCPG pick and it worked perfectly. For momentum stocks, I recommend using weekly pivots as opposed to daily pivots, to avoid folding too soon.

Add to Momentum WL - ARMH - bull flag

RL - Coiling after huge earnings beat.

Other earnings gaps on WL include AKAM, BWLD DIS, OTEX ATML.

Technical Picture - DOW Ends Win Streak

The markets gapped down on weak earnings (CSCO), ignoring the better than consensus initial claims (383 vs. 410). As we can see from the S&P Emini futures chart above, we filled Monday's bullish gap and reversed back up to fill today's opening gap. BTW, a must read in the morning for a good take on the market is Gtotoy. His outlook this morning was spot on.

The rest of the session was a chop fest as various news items were digested - AAPL disappointing sales through VZ, and the mixed messages from Egypt. As the Egypt story unfolds, it will impact futures and the markets.

The DOW ended its eight day win streak, and the other major markets ended the session just above the unchanged.

The $USD looks poised for more upside.

GLD has filled the bearish gap and now looks like it is forming a bearish wedge. If the situation in Egypt worsens, gold could be in play. There are two factors at play with gold, safe haven in troubled times, and higher interest rates which dampen gold luster. GLD gapped lower on the open because of the good claims data, which in turn led to higher interest rates and lower bond prices. I still think GLD has to go and test the 200 DMA before we get a tradable bounce.

Today's trades were the same usual suspects as yesterday. JDSU, FNSR, and AGU tested short-term range supports on the open and bounced. JDSU sold off in the afternoon and probably needs a rest.

RL is consolidating the earnings gap. I'd like to buy it if it retests short-term range support at $124.00 and bounces.

CELL and TUP are bull flagging. TUP printed NR7 today, so we could get expansion tomorrow. Also, don't forget SWK which is still flagging.

These are not recommendations to buy, sell, hold or sell short. Everyone needs to think for themselves when it comes to trading their own accounts. First, it is the only way to really learn, and secondly,you are the only one responsible for your trading decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. The plan includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios before making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.

Good Trading!