Technical Picture - Gap Fade Outside Day

The markets gapped lower on the open in the wake of lower than expected initial claims, but the bad news was quickly faded, followed by a minor pause and another thrust. The afternoon was mostly sideways consolidation ahead of tomorrow's all important jobs data.

The NASDAQ has the best looking chart with a bullish engulfing stick today on higher volume. We closed above the 50 DMA. We have a higher low and moving towards a retest of the most recent high. However, the jobs data will set the tone for tomorrow's trade.

Financials got a boost on mark-to-market rules chatter. Sounds like a desperate option to me.

Earnings Gap - Visa Inc. (Public, NYSE:V)

V was an earnings gap but was too far extended and couldn't break through $55.00. The sympathy play was a better trade with MA.

Shorted V because it formed a perfect triangle on 1 minute chart. The short trade was more satisfying than the long.

DIGG The Dinosaur

If you can spare a couple of minutes, DT is looking for some Diggs on this post.

If you're not a Digger, it only takes a few seconds to register.

Biotech Breakout - Amylin Pharmaceuticals, Inc. (Public, NASDAQ:AMLN)

Last night we said that biotechs were poised to breakout and they delivered. AMLN, ALXN, CEPH to name a few. AMLN, ALXN, and CELG had NR daily bases ready to expand. Basically, you look for these to break on the OR and use the previous late day lows as the stop. If the late day lows are breached before the BO occurs, the trade is aborted. These setups are higher risk, but usually the rewards are big.

Don't place your buy stop order exactly on the the previous day high, give it 5-10 cents depending on the price of the stock.

RIO and SID were gapping into the daily spots.


Markets sold off in the afternoon after testing resistance - rounded tops are bearish (look at QQQQ or NQ futures charts) - too much supply - every time bulls try to push prices higher, they are met with more and more supply. Problem is knowing when to short. It seems that the easiest way is to let price break below base and catch it on the retest if it fails to recapture the prior base.



CSCO guided lower after hours and auto supply manufacturers pleading for big bailout, futures trading lower so expect a weak open tomorrow. On the plus side V, AKAM delivered better than expected earnings.

Technical Picture - Afternoon Bounce

After testing yesterday's highs in the morning, we managed to break through and close higher in the afternoon. Still, there's a lot of resistance overhead. As we await the all important jobs data on Friday, I expect limited upside.

Biotechs have carved out a solid base, let's see if the sector can breakout and hold.

$USD looks weak. If it breaks we could see some commodity sectors get a bounce.

Dummy Trades

Biotechs were the best performers on my radar today. AMGN retested the base but the 20 EMA was close enough to provide support and get things back on track. BIIB was a nice momentum move as you can see from the accelerating volume.


COCO was gapper on an earnings beat with improved guidance. OR breaks out of the daily base on big volume. Since the OR is wide, place fibs. from ORL to ORH as per Trader-X guidelines. I had a buy stop order ($20.52) in place after bar 5 but it took a long time to trigger. Well worth the wait. Partial after 1 pt.

DIS is an after hours trade on an earnings miss. Inverse C&H on 1 minute timeframe. Target achieved like a hot knife through butter.

Technical Picture - Waiting for a Lower Low

Bearish trend intact, awaiting a bad bank stimulus plan. A well thought out plan could take weeks or months to develop, at which point we should get a technical bounce. In the meantime, we are likely to retest the November lows.

On the weekly chart, the bearish trend is intact until we can take out the initial reaction high from the lowest low (January high). If we breach the Nov. lows just slightly, that scenario is still valid, but if we make a much sharper low, then we start all over again.