Technical Picture - Tech Leadership

The markets gapped up on the open, the SPY probed its 50 day SMA and faded. Once the gapped was filled and prices stabilized, the bulls regained strength and pushed prices back up. Leadership was provided by tech including casinos, disk drive, internet, software (RHT earnings) and semis, in other words, a broad based tech rally.

As depicted on the SPY charts above and below, the market is extended in the wake of the rally from last week's lows. We have wedged our way back up to the short-term downsloping trendline and a pause here would be good. Rally has been on lower volume

Economic data - GDP in pre-market and Michigan sentiment at 9:55.

Copper has retested broken trendline and we will soon see if this is a dead cat bounce or not. HG_F look like they are forming a topping pattern, basing just above 430.

GDX profit taking took hold this afternoon after the big move from the lower edge of this symmetrical triangle. No surprise given the overbought bias.

Biotechs setting up a solid base here. This defensive sector looks poised for a BO soon.

Biotech sector names - I like CELG - solid base forming after testing long-term support.

CEPH (not depicted) just won its FENTORA patent suit against WPI.

AMRN if it regains $8.00.

GES Bear flag on daily. BO point is $37.50 as long as it doesn't regain its 5 period EMA (orange line on 15 min. chart below.)

Day Trades

FOSL - was hoping this would wait and set properly, but it based at $85.00 and eventually broke for a quick scalp.

JDSU gapped up, consolidated and broke above 5 day EMA.

RIMM was a good day trade into earnings, but after hours, it fell out of favor on weak guidance.

Key supports in play are mapped out on daily chart above.

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 - BIDU OXY AKAM RIMM

Two momo trades from HCPG.

BIDU opened in the retracement zone (RZ) of the previous range. Took it long as price move out of the RZ. Once it broke above the PDH, it was a vertical up to the 62% extension. It stalled at $115.00 and eventually was stopped on balance.

OXY was not as obvious, but I went long before it broke out of its Bollinger Band. Slow at first, but made up for it in the afternoon. Partial at 62% FE and exit balance at full measured move.

AKAM was an ambush setup. Took a partial when price stalled at lower blue line (low of earnings gap down day). Exit balance at yesterday's support zone - now resistance.

RIMM was a B&B long - easy.

Technical Picture - Moderate Gains

The markets spent much of the week digesting the prior week's big move. We ended the week with modest gains after some backing and filling.

Friday's leadership was provided by Oil Services with drillers pacing the way (RIG, DO, ATW...) Some refiners also moved higher (FTO). Watch for this sector to move into its base for a retest of the August highs in the coming days.

Biotechs and healthcare also saw strength on Friday. Testing August highs - needs to consolidate before breaking out.

Financials holding up well.

Semis are a drag on the NASDAQ and the markets in general. Need to see something positive price action in this group soon.

Best trade on Friday was RIG breakout. RIG was HCPG pick which generated three trades for me. The first on Thursday was a target trade to the daily spot following a bullish flag pattern. The second was the planned BO at the daily spot $56.00. The third was a short on the third test of the round $ level $60.00 on 1 minute chart.

CMG flagging on the daily (thanks to Trader Rick for spotting this one). Also flagging are TCK, BVF, BWLD.

Technical Picture - Wide Spread Weakness on European Banking Concerns

Concerns over the health of European Banks led to widespread selling on the open. Not surprisingly, banks (BKX) paced the ways down, giving back all of Thursday/Friday's gains. All but Gold was in the red by days end. Volume was light.

Banking concerns fueled money out of stocks and back into treasuries as depicted on the TLT chart below. Until the trendline is broken, I doubt we can have a meaningful rally in stocks.

Banking concerns stoked volatilty as the VIX gapped higher after testing four month lows on Friday.

And as expected the USD rallied versus the Euro.

Despite today's low volume retracement, we have to keep a close watch on the TLT, VIX, and USD to monitor the underlying strength/weakness/fear inherent in the markets.

Today's trading was light given the overbought conditions and general lack of setups.

Using the RSI price bars, I was able to catch a quick point in GS. Positive divergence to lower prices foreshadowed a trend reversal. GS forms a mini base and I used a buy stop order above the base to get long.

MON broke the downsloping trendline, but failed to hold. Now it should retrace into the support zone/5 day MA and we'll see if it can do something from there.

NTAP - two pivots into the $45.00 base. Needs to consolidate/retrace back to first level support. As you can see from the monthly timeframe below, key resistance dates back to 2000.

Technical Picture - Gap Extension to Multi-Week High

An impressive start to the month with a gap open and extension on the strength of overseas markets. A broad based rally with commodities providing leadership - Coal, steel, Oil Services all added 4+% on the session. Ag/chem continued higher as well, gapping above the 200 SMA. The sector is overbought but propels higher on the supply/demand issues priced into crop futures. Another bad day for the $USD vs, $Euro. As depicted on the $USD down below, price is fast approaching the 200 SMA. A technical bounce is due so it's important to keep an eye on it and it's effect on commodity related plays. Canadian markets were closed due to holiday.

Day Trades

Ambush short for AKAM which is weak since earnings last week.

MOS tested the ambush zone of the last leg up in opening trade. Wait for confirmation, enter long. Partial as price approaches resistance and let the balance run.

BTU was a HCPG pick from last night's newsletter. Looks like a box play and extends 100% before lunch. Sweet!

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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.