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 - Markets Mixed

We got off to weak start but supports held and the broader markets managed to test and notch marginal new highs, on strength in gold, silver, and semis (TXN/NSM merger). Technology overall, however, remains weak. Hence if the NASDAQ can't confirm the action in the broader markets, it starts to weigh, and eventually, pulls them down too. That's basically what happened this afternoon. Look at the difference between the ES_F and the NQ_F. By EOD we have a potential double top on the ES.



We've discussed the symmetrical triangle pattern on the GDX for several weeks, and today it finally broke out with decent volume. The bullish inverse H&S pattern in GLD also broke.

I traded GG in my swing account, took a partial and holding the balance. After hours GG announced expansion of the Cerro Negro project in Argentina - according to feasibility study - proven and probable gold reserves double.

Day Trades

ALXN, highlighted over the weekend as a bullish setup on the daily. Placed fibs from late day handle to ORH. Enter long as it pulls out of the Rzone.

LULU - bull flag good for a pt.

QCOM - highlighted last night as a bearish wedge on daily. I was tempted to short when it paused at the 38% Fib. retracement, but I waited till the feeling passed because the markets were still in an uptrend and there was no tangible setup. Shorted into the close for a retest of yesterday's lows.

RIMM - short into the close on break of NR base.

Technical Picture - Constructive Price Action

IBD is changing their market outlook from "Market in Correction" to "Market in Confirmed Rally" based on the out-performance of the Nasdaq today, despite the lack of volume. The logic is that prices have moved high enough above 50 SMA. The next hurdle will be to get above 2800, which should take time as there is a lot of resistance.

As we can see from the 60 min. SPY chart below, we briefly fell out of the rising wedge on late day weakness yesterday, but managed to hold in early trade today and recover by the end of the session.

If copper is a leading indicator, it may be premature for the bulls to reclaim victory, as copper has slipped back below both the 50 and 20 MAs.

Leading stocks are performing well. A few examples include SOHU and UA strong performance today as depicted in charts below. LULU strong performance yesterday with follow through today.

Day Trades

SOHU was on my focus list. I entered small size on break of weekly R1. I added when price held R2 and formed a bull flag. Exit at daily resistance. I missed the UA trade because it didn't show up on my momo scan which has a criteria for min. RSI of 60.

APA was a HCPG pick for target trade back to resistance.

APOL gapped down on weak earnings. I shorted it when it breached it's base, but the trade was slow and lacked volume. I covered on the first signs of a reversal. I entered long when it consolidated back at the original base. Exit at daily resistance.

RIMM set up a long entry on third test of resistance, but wasn't able to follow through after the initial thrust.

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!

Technical Picture - Markets Mixed

A modestly weaker open was followed by a gap fill and two waves of profit taking. However, the bulls were able to recapture most of the losses into the close. The DOW and Nasdaq were able to notch fresh new recovery highs intraday, but the S&P failed to confirm. After hours, Nasdaq futures are weak following disappointing earnings from CSCO. If tech rolls tomorrow, the broader markets will follow. As noted last night, the markets are extended and a correction here would not be a big surprise.

Negative divergence in the number of stocks trading above the 50 MA vs. the SPX.

MA and V look like they will correct here.

Last week's bull flag BO in UA reached the full measured move today. The shooting star foreshadows some profit taking.

FNSR forming bull flag on daily, but this is a resistance area on the monthly chart.

Best trade of the day on break of ORH - Vertical move to resistance.

AGU earnings gap forms cup and handle for a fast move to $98.00.

JDSU was a missed ambush trade. Had planned to trade this one, but didn't want to chase on the gap up. CIEN, another planned trade turned into a scratch.

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!

Friday's Trades - UA, CIEN, JDSU

As noted in Thursday's post, UA had a well formed bullish flag pattern on the daily. Price broke out 30 minutes into the session and never looked back.

If you missed the initial BO, a second opportunity presented itself as price consolidated at $63.00 and coiled prior to the next leg up. I took a partial at weekly R1 and let the rest run, until I got a sell signal. That was a good opp. to short as UA was extremely extended.

On the daily, we see that UA has room to run for a full measured move, so keep it on the focus list.


CIEN was a volume momentum gap which I found through the momentum scan. Price retraced back to weekly R2 which held as support. I waited for confirmation. Price consolidated at the base of the the 50% Fib. retracement and set up out a low risk entry (NR7) . I targeted a move back to the early swing high.

JDSU was an earnings gap mentioned in Thursday's post. Wait for price to consolidate on or near the rising 5 period ema on the 15 minute chart or 20 ema on 5 minute.