A firmly negative start on Friday in the wake of the worse than expected non-farm payroll and private payroll numbers (previous month revised lower as well). As we can see from the SPY chart below, price held initially at this week's narrow trading range floor, but the rebound stalled 30 minutes into the day. A second wave of selling accelerated into mid-morning with the SPY unable to stabilize until it almost completely filled Monday's gap. To make matters worse, Goldman cut their 2001 GDP forecast. This left prices trading in a tight, narrow range for several hours. Eventually all that coiling, produced a breakout to the upside as prices rallied in the last 90 minutes leaving the indices with only minor losses.
On the daily we have a either a hammer or hanging man. Keep a close watch on the trendline for a potential breach and some retracement.
If the market weakens, play defense with biotech/healthcare sector. Large caps biotechs such as CELG and AMGN look poised to move higher.
Swing Trade Update
From the RIMM chart above, we see that Friday's strength (bullish engulfing bar) sets up a perfect ambush long. I trimmed my short position by another 25% and tightened the stop as depicted above. Barron's unfavorable article this weekend may help tomorrow.
Day Trade
As mentioned Thursday night, Cramer's ill-timed Mad Money recommendation to buy POT and other sector names, after such a huge move, could provide the perfect storm for a shorting opp. The sector gapped up Friday morning as his disciples blindly jumped in. As soon as prices fell below the PDH, I shorted POT for a nice swoon to fill Thursday's gap. Notice the negative divergence of the RSI to higher prices on the 15 minute chart above.
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.
A firmly negative start on Friday in the wake of the worse than expected non-farm payroll and private payroll numbers (previous month revised lower as well). As we can see from the SPY chart below, price held initially at this week's narrow trading range floor, but the rebound stalled 30 minutes into the day. A second wave of selling accelerated into mid-morning with the SPY unable to stabilize until it almost completely filled Monday's gap. To make matters worse, Goldman cut their 2001 GDP forecast. This left prices trading in a tight, narrow range for several hours. Eventually all that coiling, produced a breakout to the upside as prices rallied in the last 90 minutes leaving the indices with only minor losses.
If the market weakens, play defense with biotech/healthcare sector. Large caps biotechs such as CELG and AMGN look poised to move higher.
From the RIMM chart above, we see that Friday's strength (bullish engulfing bar) sets up a perfect ambush long. I trimmed my short position by another 25% and tightened the stop as depicted above. Barron's unfavorable article this weekend may help tomorrow.
Since last Monday's sell-off, we've had some institutional quarter-end window dressing. Still, no accumulation as the up days are on declining volume, excluding Russell re-balancing which doesn't count. I'm expecting that the bounce will fizzle out once the window dressing is complete. S&P /SPY may be setting up for an ambush back down as it approaches the 62% retracement of the previous leg down.
Day trade CELG after breach of support reverses with a hammer-like stick. Easy to spot these if you have S/R lines mapped out ahead of time.
NTES, SNDA, SOHU all opened strong. NTES was the obvious entry because of the IB, but SNDA was the big winner.
FLS was a trade idea from Briefing.com Swing Trader, Scott Smith. C&H entry on 1 minute timeframe. It ran into resistance today, but the chart is very orderly so I'm keeping it on the WL.
ABX - hammer reversal at support from PDH.
RIMM was not a trade for me today, but I'm posting the chart as a possible Dead Cat Bounce - shorting opp. I'd like to see it retrace a bit more and fail on the third test of the trendline.
SRS (inverse real estate ETF) setup nicely today relative to its MAs. It opened with a WR first 15min bar which is an early indication of increased volatility. The second 15min bar closed above the 5-day SMA (orange/peach colored MA). The third 15min bar was strong and took out the 30min ORH. The next four 15min bars were a pullback that culminated with a hammer-like bar off of the previously broken 5-day SMA. The high of that bar also lined up with the 30min ORH. The entry was a rebreak of the ORH. After some resistance at the morning high, it broke out and easily hit the 62% extension of the 30min OR.