Technical Picture - Uptrend Persists

After a pullback at the front end of March, the uptrend has exceeded the 23.% FE and continues with little hint of a correction any time soon. As long as we hold the HWB level of the current FE (green fibs), we should reach the next target 1420 very shortly.

The only caveat I see is that small caps are lagging as depicted below. A failed BO of the IWM would be a red flag for the broader markets.


Swing trades in play DVN, POT, GLD.


DVN broke out of a long consolidation pattern on high volume. I waited for a pullback to the bottom of the ambush zone. Price had a nice bounce off of the initial entry, but stalled and retested. Now, it is starting to move in the right direction towards a retest of the highs.

As we can see from the daily chart of POT above, it pulled back to the bottom of the ambush zone (50-62% Fib. retracement level) on Wednesday.

On the 15 minute chart below, we entered long on the first ambush retracement after Thursday's gap up. We added to the position on Friday as it flagged after another gap higher. Partial profits taken into the close. Plan to add back on a pullback.



GLD sold off sharply following the last FOMC statement. It has corrected back to the ambush zone on the daily. I'm looking for a bounce half way back to the ambush zone of the counter trend trade (green fibs). After which I'll be looking for a short.

The 15 min. chart below, shows the initial entry, stop below red line.

AAPL is extremely extended. It has breached it BB twice in this parabolic move higher. The first breach was met with a quick shallow retracement to the ambush zone, and we appear to be doing the same again on the second breach. A failure of the ambush, could see a deeper correction back to the rising 20 MA.

John Bollinger talks about the Three Pushes to a High pattern in this month's issue of Stocks and Commodities magazine. This pattern suggests that the next time the BB are breached within this uptrend, AAPL will be ripe for a full HWB (half way back) from the October high to high.

N.B. Apple will disclose its plans for $100 billion cash reserves tomorrow at 9:00 AM EST. NQ futures have rallied to new highs this evening.

Technical Picture - Bullish Response to FOMC

As discussed in my last post, the SPX chart above shows that since the new year started, we've broken out of the mean reverting pattern we were in over the past few months. The two fib patterns show two ambush setups. The second smaller ambush reached its 23.6% Fib extension target, and now we are moving towards the larger target - 1344.

Last Friday we were looking to BO of the first Fib extension. Monday morning, we blew past the 23.6% FE and drew a new extension (green), but failed to hold the 50-62% retracement. That failure resulted in a fast move back down the ambush zone of the stretched original FE. Buyers stepped in and managed to take price all the way half way back (grey fibs). As depicted below, the bears ambushed EOD and the counter-trend traded to the 23.6% target on the open Tuesday.

Today, bears failed after the release of the FOMC statement. Shorts were squeezed out of positions as price rallied to new highs.


Price reached the the 23.6% FE and now we stretch our Fibs and hope for a chance at a new ambush tomorrow.

Technical Picture - Bullish

The SPX chart above shows that since the new year started, we've broken out of the mean reverting pattern we were in over the past few months. The two fib patterns show two ambush setups. The second smaller ambush reached its 23.6% Fib extension target, and now we are moving towards the larger target - 1344.

The 15 minute SPY chart below, shows three ambush setups. The first two were traditional low to high Fib setups which involved some gap filling. The second Fib ambush blew past the 23.6% target, so now the third fib (red) is an extension from previous high to high. The ambush traded on Friday. If we blow past the 23.6 FE, we'll have to draw new Fibs from Friday's high to the next high, if not, we'll use the same anchor and stretch the Fibs and wait for the next ambush.

In the event that the Fib. extensions fail, we'll have a much deeper pullback, probably all the way, half way back from the base of the blue Fib. pattern on the SPX daily chart.

Technical Picture - Ambush

As depicted on the daily ES emini futures chart above, the bears ambushed the bulls at the cusp of the ambush zone ( 50-61.8% Fib. retracement) and carved out a reversal bar.

On the 15 minute chart below, we see that in pre-market, price printed new highs, but failed to hold, leading to failed BO and swoon back to former resistance just as the US markets opened. The first test of support was a buy and we traded half way back to the 15 min. ambush zone. This is where the algos a programmed to short once a trend is broken. This level was tested twice and the algos defended both times.

Basically, we carved out a symmetrical continuation triangle and support gave way into the close.

The short squeeze off of the Oct. 4th lows was getting long in the tooth. We were overbought and needed to correct. If the bears can push prices below last week's congestion area, we will likely trade half way back to the October lows.

Technical Picture - Bulls Get Ambushed

Yesterday, IBD changed their current outlook from "Market in correction" to "Market in confirmed uptrend" based on a high volume follow through day on the NASDAQ as depicted above. Today, they are saying that the rally is in its third year and any new uptrends can fail because the rally is tired. So what observation can we make from this? Just looking at the NASDAQ chart above, two observations can be made:

1. It took four consecutive higher closes to get a confirmed follow through off the reversal last week. That's a long time and should be considered suspect.
2. The follow through day occurred in the ambush zone (50-62% Fibonacci retracement level).

Overall economic data has been soft in recent weeks and today's ADP private sector jobs was even softer, ie. dismal. Top that off with a lower than expected ISM and we had the makings of a real market drubbing.

The 60 minute SPY chart below highlights the double top in the ambush zone. Two trendlines were broken as the bears took over with a vengeance.

There's lots more economic data over the next two days, including the real jobs data on Friday.

The $USD held minor support and bounced.

In my last post, I highlighted a number of stocks setting up. Most of those daily charts are broken after today's session, but we did manage to get some good day trading action.

ERTS broke out of a daily bull flag yesterday.

NVLS set up a long above yesterday's lower base. Took a partial at $37.00 and was stopped out on balance.

MELI, which was my favorite long setup (also included in HCPG newsletter last night), had a beautiful rip after consolidating the opening range and forming a C&H pattern overlapping with the previous session. Euphoric volume spike foreshadows the end of the move.

As we can see from the daily, the BO failed and we have a bearish shooting star.

In my last post, I said that RIMM was a box play. The box was breached in pre-market, so I placed a sell stop just below the pre-market low. Took a partial after three consecutive WRBs.

Technical Picture - Modest Gains

Markets are little changed since my last post on April 5th. Tech is till lagging with weakness in tech titans AAPL and GOOG, as well as disappointing guidance from INFY late last week.

The SPY is carving out an inverse H&S pattern, but earnings will be key.

Companies reporting earnings the week of April 18th-22nd include:

• Monday: C, LLY, HAL, KEY, AMTD, GWW, TXN, and ZION.
• Tuesday: BK, CMA, FRX, GS, JNJ, NTRS, BTU, STT, USB, CREE, CSX, HBHC, IBM, INTC, ISRG, JNPR, MANH, STX, STLD, VMW, and YHOO.
• Wednesday: ABT, MO, AMB, T, ATMI, ELN, EMC, FCX, HBI, FCX, NDAQ, DGX, WFC, AMGN, AAPL, CPHD, CAKE, CMG, ETFC, FFIV, GILD, LRCX, MAR, QCOM, WDC, and YUM.
• Thursday: BBT, BIIB, BLK, CNH, CY, FITB, GE, MCD, NOK, NUE, PCX, PM, SLB, TZOO, VZ, AMD, SNDK and SYNA.
• Friday: Markets closed in observance of Good Friday
  

AAPL has carved out a bearish H&S top. Earnings on Wednesday.



Friday's Trades - MBI low risk entry as price moves out of the retracement zone.

CTSH - I was looking for a short entry around $78.50, but didn't get a NRB, so I passed. After a minor extension, price formed a nice base at $78.50 and took it long back to the ambush zone. Should have shorted the ambush because there was no volume on the rally.

Thursday's Trades - JBHT - gap and flag.

CAT - Low risk long on break of flagging type pattern. Add on the B&B setup.

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!

Technical Picture - Markets Mixed Ahead of Jobs Data

Marginally disappointing initial claims figures gave the bears the edge in pre-market. A 62% retracement of the early slide was ambushed and the S&P emini futures extended a full measured move in 30 minutes of fast selling. After the midday chop, no follow through occurred as participants were cautious ahead of tomorrow's jobs data.

On the 60 minute chart of the SPY we see a double topping pattern taking shape. If the pattern breaks down, we could see some fast selling. On the daily (not depicted) we have two red hanging men, which, if confirmed, could be very bearish short-term.

$USD strength continued for the third consecutive session as price broke out of a month long bullish flag pattern. Energy, precious metals and commodities (excluding Ags) saw some profit taking.

Watching KOL closely for a possible bearish island reversal.

Not many good stocks to day trade today on my radar. Took a long entry in VRX as price pulled back into the BB and found support from the rising 5 period EMA on the 15 min. timeframe. Price/volume contracted (NR7) ahead of expansion, but the expansion was somewhat slow.

Technical Picture - Markets Mixed

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The markets gapped higher on the open, but the gap was quickly faded. Prices extended lower, beyond the gap fill, to first level supports. Prices stabilized and started to rally mid-morning, eventually extending to fresh 52 week highs. The S&P tagged 1250 which is the full measured move of the inverse H&S bottom from last summer as depicted on the chart above. The DOW did not confirm as it was dragged down by AXP weakness on a downgrade.

On the SPY 60 minute chart below, we see that prices are still consolidating within a tight range. Watch the MACD as it coils on the signal line, which could lead to a big move on light volume.

$USD still strong.

Oil has carved out a bull flag and looks ready to BO. A full measured move on a successful BO, should see $97.00.

CNQ flagging.

Copper and coal are bullish and flagging.

Trades

AMRN reached the full measured move of the bull flag pattern today and I sold more shares. I'm still holding 20% and will add to the position on a pullback. There's no resistance on the weekly timeframe until we reach $10.00.

AMZN was a HCPG pick. I waited for a low risk entry after the retest of the BO point. Did not want to trade this on the open (too risky). I'm glad I waited.

POT - buy support and sell at round $ level.

CHK was an ambush trade.

NQ formed a nice continuation triangle after the initial rally from support. I took a partial when the symmetrical target was reached. Price consolidated again in a tighter coiling formation before going vertical for the last sprint of the day. This was my favorite trade of the day.