Technical Picture - Markets Mixed

Lackluster trade until the FOMC statement was released at 2:15. As expected rates are unchanged and, current economic conditions dictate exceptionally low rates for an extended period. FED is also prepared to provide additional accommodation if required. How did the market react? Stocks, gold, and treasuries rose and the dollar sank. All but stocks managed to hold those moves into the close.

TLT has regained its broken trendline, UUP looks really ugly, GLD notched new closing high and the S&P looks somewhat bearish intraday, but it has a lot of support from the BO base. If it forms a right shoulder intraday, the technical picture will become clearer.

Doji flags are bearish. GS rips to resistance zone, carves out a doji flag on the 15 min. timeframe above, and sets up a reversal. Short as depicted on the lower timeframe below.

Post FOMC, short the trendline break.

Gold rips post FOMC. Using ABX as a proxy for gold, wait for retracement of initial spike, and go long.

Tracking Big Gappers - RIMM

Trader Jamie advocates populating his WL with stocks that have recently experienced a large, high volume gap. Besides being a WL regular, RIMM experienced a big upside gap last Friday after beating estimates. The daily chart is shown below.


On Friday, RIMM was in consolidation mode. Today, the opening range (30min) action demonstrated that RIMM was in a range expansion mode (wide range, full bodied, green candles). Following a breakout of the OR, the 15min chart setup a low risk entry following a doji candle at the ORH. The target was a 62% extension of the OR.

Single Focus - RIMM

Coming into today (Friday), I knew that RIMM had beat estimates and was going to open with a big gap up. Sometimes I choose to focus all of my attention on a single stock if: a) I have limited time due to work, and b) I know that one of my watchlist favorites (such as RIMM) is going to gap big and probably trade huge volume.

Below is a 10min chart of RIMM. The first candle was a doji with long lower wick. The second bar was bearish and closed below the 50% level of the OR. The third 10min candle closed just below the 62% retracement zone and was the narrowest range of the morning. That was the trigger bar.


I could (and should) kick myself because it traded exactly (to the penny) to the 61.8% downside extension of the OR. I was EXPECTING more range and missed the exit. The stop out resulted in less than half of what the target would have generated. Afterwards, I could tell that the indices were in consolidation mode and RIMM was acting similarly. Overall, a fairly choppy Friday.