Technical Picture - Elusive Bottom

HCPG included this four bears graphic from dshort.com in our daily newsletter. It is updated on a regular basis - an interesting link to follow as it develops.



The elusive bottom is in our sights. As we can see from the weekly chart of the S&P above, the head of the inverse H&S bottom is really taking shape. We could bottom as early as next week, or it could take a few more weeks. I'm looking for a definitive candlestick formation, such as a hammer on the weekly to mark the end of the bear market. A shakeout, such as a bullish engulfing or piercing pattern, would still leave the door open for more offsets, so I would prefer the more dramatic signals such as the hammer or morning star type of pattern. But, the unfinished Geithner toxic bank asset plan is still an overhang on the markets.

USD looks like it may roll over soon. Friday's stick is hanging man which needs to be confirmed with a lower close.


ABX no longer a proxy for gold. Is this forming an inverse H&S or is it forming a bear flag? Not sure but, ABX and gold have been sluggish as safe haven, given the markets continued plunge last week.

AMGN is a proxy for biotechs. Approaching support and a technical bounce opp.


Oil - I like how all the MAs are crossing over under price setting up for a BO to the upside, but Oil has been teasing us for a while so I'm still cautious heading into a new week.

Stair Step - The Gymboree Corporation (Public, NASDAQ:GYMB)

Stair step patterns offer low risk entry points. I missed the first step up, but managed to get the second long and then the short after price stalled out at $17.00. I'm keeping this one on the WL for tomorrow, because sometimes the stairs carryover to the next session and they can run all day.

IDCC was a gapper trade for me two days ago. Gravestone doji trigger bar just below downsloping 5 period EMA - took a partial after 3 consecutive red bars. My target was the 50% FE (Fibonacci extension) but IDCC didn't want to go there, at least not today.

POT made a lame attempt to retrace, but the candlesticks were screaming "short me". Trigger bar is NR7 - spinner with upper shadow. Partial after 3 WRBs and exit as price approaches $68.00 just below 50 % FE. It's not obvious on this timeframe, but 1 minute shows clear signs of capitulation volume as price approaches FE.

V ended yesterday's session with a bearish topping candlestick pattern. I placed my fibs from PDH to ORL. I was expecting it to carve out a few inside bars and roll over, but V rallied back up to the top of the R-zone. Finally, it came back in and printed NRIB and I went short. After testing ORL, it retested my BO point, and eventually succumbed.

Technical Picture - Dead Cat Bounce

Today's rally felt lame, especially with the sell-off into the close. Friday's jobs data will likely give more clarity. Until then we have initial claims (consensus 650k) tomorrow in pre-market and factory orders at 10:00.

Gapping after hours ADBE, SIGM, and GYMB

Chart Patterns - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

POT formed a bearish rising wedge. Price breaks out of wedge on rising volume with 4 consecutive lower closes. It looks like a flag pole. Price consolidates on lower volume = flag. Short the flag for sweet ride.

The NQ trade EOD is my "Kill or Be Killed" setup. How does it work? The markets have been grinding higher all day, but I'm just not feeling bullish about it because volume never really ramped up. I see what appears to be a topping pattern, in this case a H&S top. I short early and set a stop 1 point above the high of the day. This one tested my patience because it retested the top of my head. I took a partial at the base of the pattern because I still had to wait for the right shoulder to form and the suspense was going to be too much. When the pattern finally completed, it was a nice rip lower.

MANT was my gapper trade from the scanner. A few decent sprints up but no extension.

Gapper Trades - Genzyme Corporation (Public, NASDAQ:GENZ); InterDigital, Inc. (Public, NASDAQ:IDCC)

greytrader asked in the comments to last night's trading post:

Did you drop briefing.com for pre-market gappers ? I have found that Trade-Idea's gapper scan misses a lot of candidates that other scanners pick up.

I still subscribe to Briefing.com which is invaluable for news driven trading events, as well as pre/post market information including gap scans.

Trade-Ideas scanner is user defined, so you can set wide or narrow parameters as your trading plan requires. For my purposes, I prefer quality over quantity. Especially as it relates to gappers. I want a short, tight list as opposed to a catch all. It would be too time consuming for me to sift through a long list of gappers, and I would miss most of the trades unless they occurred later in the session. Hence Trade-Ideas Scanner is perfect for me because it allows me to quickly zoom in on quality, and number of prints.

I'm guessing but, I think that greytrader trades gaps exclusively, so maybe that's why he prefers other scanners.

As we can see from the above screen capture of yesterday's post market action, GENZ had a high quality as measured by days and numerous prints, which signifies lots of selling into 52 week lows.

This morning IDCC had the most prints and was set to open at 45 day lows which is significant. SKYW didn't have many prints but was set to take out 52 week lows. I didn't get to the latter, it just blew right past me, but IDCC finally developed an inverse C&H on the 15 minute timeframe. It stalled after taking out the 38% fib. extension of the ORH to the base, and I booked a partial. After a lot of dead zone, sideways trade, it finally headed lower and finished the job.



I'm not doing a technical post tonight. In after hours trade, GOOG had the most prints lower, testing 39 days as GOOG's CEO came out with a statement that "we are not immune" to economic situation. Sympathy prints BIDU, AMZN.

Technical Picture - Bearish Start to New Week/Month

This is monthly chart of the S&P. Next support level 680, followed by 600. The lower support line at 472 represents the 38% Fibonacci extension of the double top pattern. Now that's a sobering target.

On a positive note, one of Kudlow's guests tonight, Doug Kass, predicted that the 2009 lows will be made this week. Watch the video near the end. The intro - Buffett/Baseball metaphor is good too.



Higher $USD smashes commodities.

Click on charts to enlarge

Opening Range Breakout - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

First order of business today was to lock in my swing profit on ABX. Today's market sell-off spared no sectors, so pointless trying to pick a bottom until a clear reversal pattern develops.

POT/AGU carved out bearish h patterns.

STT from the Trade-Ideas pre-market gapper scan faked an upside move, but quickly failed, setting up a low risk short. Took a partial as price retraced to the ORL. Eventually, STT carved out an inverse C&H, but failed to extend much beyond 50% on the first swing lower.