Technical Picture - Markets Edge Up in Quiet Trade

The SPY has managed to fill all of the gaps as it bounced off of the lower channel line. However, there's been a lack of momentum as depicted by the RSI. Without a catalyst, I expect more lackluster trade.

The $USD failed in a attempt to BO of an inverse H&S bottom. This has provided a boost to the commodity trade, but outside of Ags and copper, I'm not seeing much conviction yet.

ES_futures trading higher on a very weak $USD as I write this post.

Stocks Setting Up for This Week

NVLS- NR7 coiling - buy on break of $36.00 for a move back up to the base of inverse H&S pattern, and eventual BO.

Flagging - PETM (above) and ERTS (below). Other bullish flags on my WL are DISH and FL (not depicted).

QCOM has been basing in a tight formation for several weeks. Now that the Bollinger bands have tightened, I expect a BO attempt very soon.

MELI has carved out a symmetrical continuation pattern with strong volume on the upswings within the triangle. This is the most promising setup for a BO long.


RIMM is a box play.

AKAM - positive divergence of the MACD to lower prices foreshadows a trend reversal.

FFIV cleared its 200 DMA on higher volume. Look for price to consolidate in upper range and then BO.

CREE cleared its 50 DMA on decent volume. Base and break.

Technical Picture - Technical Rebound In Play

The markets continued the rebound off the 62% retracement which bottomed yesterday. Tech and small caps outperformed the broader markets. I would expect the rebound to slow or stall into OPEX over the next two sessions as pinning comes into play, and as we move towards the down trendline.

Econ. Calendar - Initial Claims in pre-market, followed by existing home sales, Phil. Fed, and leading indicators at 10:00.

IPO - Looking forward to the LinkedIn IPO tomorrow symbol LNKD

Last night I posted the daily chart of ESRX as a bullish base on base pattern. Today it pulled back to its rising 200 SMA on the 15 minute timeframe and found support , as it has over the last few sessions.

An easy, low risk entry presented itself on the 1 min. chart below.



SNDK was a low risk short after price failed at resistance (blue line). The short extended to 1.27 and reversed, setting up a long. Looks like a solid C&H pattern setting up for tomorrow.


RIMM gapped up on an analyst upgrade, which ruined my morning star daily setup. Small scalp trade.


ALTR was very strong out of the gate. I waited for a Fib. retracement rather than chasing early strength. It worked well for a 1.27 FE.

Chart Setups - ESRX, AKAM, RIMM, SINA, SOHU, GOOG

The following charts were posted on Chart.ly.

SINA is a morning star stick reversal pattern with good volume.

SOHU is a bullish engulfing stick on the support zone.

RIMM is a morning star reversal pattern on long-term support with a very oversold RSI.

GOOG is a wide bullish engulfing stick in a key support zone.

ESRX is a base on base continuation setup.

AKAM is a hammer reversal stick on support.

Technical Picture - Stocks Retreat to Low End of Range

The first chart above is a weekly chart of the SPX with the RSI superimposed. The most important element of the chart to note is divergence of the RSI. We note that when the market bottomed in March 2009, we had positive divergence of the RSI to lower prices which foreshadowed a reversal. Now we have negative divergence of the RSI to higher prices which foreshadows a reversal, or at least a correction.

This week's price action was mostly range bound, but the bears made the presence felt on Wednesday and Friday. As depicted on the 60 min. chart of the SPY above, we see a H&S topping pattern develop with in the latest price range. If we break down, I expect a gap fill. All 10 major sectors were down on Friday with Financials (-1.5%) leading the way followed closely behind by Material -1.4% and Tech -1.2%.


Overall, tech was weaker than the broader markets on Friday. Two big names that were a drag on tech were NVDA and YHOO.

SMH is still basing at recovery highs but needs to break and close above $37.00. My scans indicate that several of the old school chip names are best positioned to make this happen - ALTR, CY, INTC, MCHP, MXIM, NVLS, QCOM, XLNX.

Much of the weakness in commodities is due to strength in the $USD. As we can see on the daily above, price has bounced into a former support zone which could now act as resistance in the short-term. The RSI has moved beyond 60 which suggests this bounce is quite strong.

Keep an eye on the UUP as it trends higher within the price channel.

Ags have not performed well lately, but we could be forming a multi-month triangle pattern. I wouldn't be surprised to see a bounce here or at the 200 SMA. Note the volume spikes on up days exceeds down days over the last two weeks. We keep reading of crop delays due to excessive moisture. Over time this will affect the price of the underlying crop commodities, and in turn, the agribusiness.

Blogger

Sorry for the lack of posts over the last two days. Blogger was down for maintenance and when that didn't work, it was just down. Hopefully, it is back in business and I can post some charts over the weekend.

Tecnical Picture - Bounce Extends

The market has retraced 62% of last week's slide on lighter volume. As depicted on the the 5 min. chart of e-mini futures below. Last Friday's jobs report gave us a wide gap, but formed a bearish rising wedge which eventually led to a complete gap fill. Monday's action was inside, and today we were finally able to extend beyond Friday's high.



SLV has filled the bearish gap more or less, but the bounce has been lame in terms of time and volume. It took three sessions to retrace one day's losses. Very choppy intraday action - not my cup of tea.

USO has retraced 38% of its slide, but needs to push up to 62% in order to fill bearish gap.

$USD is consolidating after breaching downsloping trendline.

Most of my morning trades were scratches but the afternoon trades turned things around. I have been keeping an eye on RIMM's decent. Today, it breached $44.00 for a minute or two and then snapped back - head fakes usually lead to good trades in the opposite direction.

RIMM is technically oversold (daily RSI below 30) and was a good candidate for an oversold bounce (short squeeze).

Enter long on break of NR7 following head fake. See the volume spike as price takes out the obvious resistance levels (blue lines). This is where the stops get triggered and the squeezes occur. Keep on WL for follow through.

CTSH looks well positioned for an attempt at a gap fill following last week's earnings gap.

Technical Picture - Commodities Get Crushed Extending S&P Losing Streak

The CRB commoities index DBC chart above, fell 17 pts. (the most in 2 years) almost 7% on huge volume today. No commodity escaped the selling. Gold lost $40 (3%) while silver lost another 10%. Crude oil fell $12 (10%). Copper lost 4%. Part of the reason for the heavy commodity selling was a sharp rebound in the U.S. Dollar. Look at a chart of UUP and you'll see a huge move up on massive volume. Most of the dollar strength came from a falling Euro which tumbled 2% on the ECB suggestion the next rate hike was being postponed. The breakdown in commodities (and copper in particular) is especially troubling since it suggests that the global economy is slowing. That may also explain why bonds are rallying and stocks are correcting around the globe.

Furthermore, sector rotation over the past weeks suggests a move into biotech/healthcare, consumer discretionary, and utilities, all defensive sectors, which could indicate a near-term market peak.

The S&P is still on a path of lower highs and lower lows as depicted on the 60 min. chart below. The first support level held in early trade, and a nice rally ensued. We moved to the upper channel line, consolidated and then plunged, carving out another lower low. If the S&P doesn't turn around tomorrow, we'll have a failed pattern IMO. Inverse H&S pattern broke out, came back for a retest and failed.

Job data tomorrow in pre-market.


The NASDAQ is holding up well so far. The SMH is still basing out, but the biggest holding in the SMH is INTC which has been vertical since reporting earnings two weeks ago. Not sure the other components of the SMH are really strong enough to propel this sector higher.




We've been talking about an oversold technical bounce in the $USD for a while now, so today's move is no surprise.

Oil prices back under $100.00. Smart money trade of the day was short USO because oil futures (CL_F) were bear flagging in pre-market.


Just when many thought, it couldn't go much lower, it gaps down and rips lower on higher volume. SLV has given back three months gains in one week. Next supports are $33.00 and $30.00.

I'd like to see SLV gap well below it's lower trend channel line and then bounce. Today's gap down was well within the channel, so no trade. I tried some long when it capitulated into the lower channel line on a huge volume spike, but it didn't end well. A lot of aggravation for a scratch trade.

If you're hurting yourself trying to pick a bottom in SLV, it's not worth it. Margin requirements are being increased frequently and every increase is another leg down. When you see a bonafide short covering rally, you'll know it and you can jump in.

SPY - Levels of Interest

It feels like we will test SPY $134.00 in today as ES_F is printing a lower low in pre-market. All eyes are on this level. If it doesn't hold we have a small bullish gap support area just below. The level of strength of the kick back rally will be telling.

Also watch copper, oil and gold futures, all of which have sold off with volume in pre-market. This could be the flush we've been anticipating.

Initial jobless claims very disappointing 474K vs. 410k consensus.

Technical Picture - Correction In Play

After breaking out of a bearish rising wedge, the SPY corrected to the first minor support level and bounced in the last hour to trim today's decline. The Nasdaq corrected more sharply on higher volume resulting in a distribution day. Most technicians expect a retest of SPX 1340 (former resistance) to come into play.


The SMH retested resistance and is now pulling back on light volume which is constructive. Bullish gap support might be tested.



Th parabolic SAR sell signal for silver ishares triggered yesterday as depicted on the chart above. High volume selling over last two sessions.

The beaten down $USD is forming a tiny base. This could lead to an oversold technical bounce and move back towards the downsloping trendline.

Today's Trades

When I logged into my broker account this morning, there was a bulletin advising of an increase in margin requirements for silver derivatives. This was a good clue that SLV could be under pressure again today.

CTSH was a failed BO yesterday, and today's gap down and breach of support, set up a good shorting opp.

The best part of the CTSH trade was the reversal long after price formed a perfect, low risk handle on the 1 minute chart below.

At the EOD price broke back above resistance. I'll be watching tomorrow to see if CTSH forms a bullish inverse H&S bottom.

ARMH, another failed BO from yesterday, set up a short on break of well defined support. Took a partial at gap support, but eventually it failed. Covered balance as price approached complete gap fill. Not much of a bounce after such a big move.