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 - Rally Testing Key Levels of Interest

Another accumulation day after a solid start to earnings season. Price is now testing the downsloping trendline and the 50 SMA.

The S&P has rallied 8.8% already this month from intraday low to high bringing the numerous technical levels of interest into play. Despite the extensive six day surge, however, the market has a catalyst after hours (INTC earnings) for further gains in early trade Wednesday. An initial resistance above is in the 1105/1107 zone with a more important area at 1112/1115 (200 SMA/50% retracement of April-July slide).

Chips stocks should rally back to the top of the recent trading range.


Euro continues to show strength vs. $USD which breached its trendline on closing basis today.

Expecting Gold to breakout on next test of trendline.


AGU - Good example of one of my favorite leading indicators - MACD divergence. Positive divergence of MACD to lower prices foreshadowed a reversal. Price reversed sharply and has come into resistance of 200 SMA. I'd like to see a shallow retracement (38%) for entry of a swing trade long.

APKT forming an ascending triangle.

NRIB (NR7) - Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

I think the RIMM trade is self explanatory. If you're not familiar with the power of NR7, read this post from last week.


JPM breached the top of it's steep upwards channel on Friday. Today, it carved out a higher high with negative divergence of the RSI, so I put in a buy stop order on break of blue line. I'm keeping this on the focus list - looking for a correction back to lower channel line.

Divergence in VIX and SPY

Jamie had a great short in the SPY late on Friday described at the end of this post. I shorted AAPL late on Friday based on the divergence between the VIX and SPY. AAPL was a WL stock that had shown relative weakness throughout the session - so the choice of AAPL was just a relative weakness play. However, the more important point is the divergence between the volatility index (VIX) and the S&P (SPY) on Friday afternoon. Following the rounded bottom pattern in the VIX 15min chart, the divergence region is marked with vertical lines. The flag action in the VIX was screaming to short something late on Friday. The VIX has been a powerful indicator/tool for me over the last few weeks.