Bullish Day and Close - ABX

Bulls owned it today with a gap up opening and a strong close on higher volume in both the NASDAQ and S&P. The VIX is still holding longer term support in the 35 area.

The previously mentioned daily coil in gold combined with weakness in the US dollar led to an upside range expansion move in gold. Of the gold stocks on my WL, ABX appeared to be the relative strength leader. Following consolidation at the ORH, the 10th 15min candle took out the ORH and closed at its high. I partialed at the 62% extension of the OR and trailed a stop at the lows on the remainder.

Beware the Chop - Vacationing Traders

I just realized why there is so much chop in market of late. Many/most of the traders at trading blogs I follow are on vacation (including Jamie and Trader-X). Without those market movers, we are left with chop as shown on the SPY chart below. There is nothing remotely resembling a trend day over the last 5 days. The good news is that consolidation is either accumulation or distribution and will eventually lead to a nice expansion move (up/down?).
This morning VRTX hit my scanner based on %change from open and big volume. The daily had broken out above a trendline and the 15min setup a low-risk entry at the 30min ORH. It easily reached the 62% extension of the OR and went beyond. Even when the overall market is in chop mode, a strong setup in an individual stock can lead to a trend day (i.e., opens near the low/high and closes near the high/low).

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.

And Then There Was Silence...

With Jamie (Wall St. Warrior) and Trader-X both on vacation, it is very quiet. Below is what Jamie's trading facility looks like when he is gone. This supports the adage that simpler (trading) is better.


Monday and Tuesday of this week were fairly choppy and good trading setups were elusive. How do you know if a market session is "choppy"? Choppy sessions are characterized by congestion regions with lots of offsetting candles and/or doji like candles with upper and lower tails. Offsetting candles are pairs of candles whose bodies alternate color (green followed by red, or red followed by green). Also, most choppy days have a closing price that is near the opening price.

Look at the 15min QQQQ chart below and notice the congestion regions highlighted on Monday and Tuesday. Also notice where the market closed relative to where it opened. Although the market opened lower today (Wed gap down), there was steady buying pressure throughout the day (with some chop near the close). So, the market opened near the low of the day and closed near the high. These types of days are easier to trade and are where bigger money is made.


Here was my best trade on the long side today. The Fib lines are drawn per the classic gapper rules - from PDL to ORH. The steady buying pressure in the overall market allowed me to hold for the 62% extension of the large Fib range.

Inverse Head & Shoulders - Barrick Gold Corporation (USA) (Public, NYSE:ABX)

RIMM was my opening range breakout trade. Why was I watching RIMM this morning? As you can see from the daily chart above, yesterday RIMM closed near its lows, just below a key support level $45.00. This could lead to a continuation play or a snap back reversal at support.

As depicted on the 1 minute chart below, RIMM gapped up and quickly reversed. I placed my Fibs. from the ORH to the low of yesterday's closing bar. I wanted to short the continuation setup as price took out the closing lows. At first it was choppy, but as price approached the base, it carved out some NRIBs. Use last pivot high as stop (red line segment). It fell like a hot knife through butter and I exit on a hammer like bar between 100-150% extension.

RIMM support at $40.00 should bring in bargain hunters.


ABX extended yesterday's weakness in early trade and reversed. It appeared to be carving out an inverse H&S base. We can assume this as the right shoulder holds support near $37.00 (neckline) as it did on the left shoulder. I took an early entry as price formed a narrow base inside the right shoulder.

I exited half as price broke the accelerated trendline on 1 min. and was forming a long upper shadow on 15 min. I added back when original trendline held as support.

I planned to exit the trade at the same price that I shorted yesterday. Why? Because I believe that price has a memory. Many will dispute this theory, but it works effectively for me and that's all that really counts.

Opening Range Breakout

Traded NTAP, RIMM, POT long. NTAP and POT were sweet, RIMM was not.

Profit Taking - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

POT took out PDH and extended 50%, printed a big hanging man, retested the highs but couldn't push through R2. The second hanging man, strategically placed at R2, provided a very good clue that POT was going to come into some profit taking.

SCO and BIIB were from the gapper focus list. BIIB was a coil and move back to ORH, followed by a long, almost painful, wait for the anticipated C&H to develop.

SCO was an ORBO with extension following the gap fill consolidation.

SLB, also from the gapper list, was a good intention for a H&S BO, but I missed the entry. Hope you got involved.

The key criteria for H&S tops are big volume on LS and Head and relatively little volume on the RS. SLB meets the criteria and delivers a fast trade - gap fill and perfect measured move - 100%