TI Gapper Scan - ATI Mirroring VIX

ATI (lower 15min chart) hit one of my TI gapper scans today. Mid-day I noticed that the pattern in ATI was mirroring VIX (top 15min chart). The VIX tends to move inverse to the broad market (VIX moving up means market probably moving down). The main reason I like the VIX is because it usually has less noise - compare it to SPY, QQQQ, etc. Therefore, the turns and flags are more obvious (to me anyway). The action in ATI alone was compelling. Combined with the pattern in the VIX my confidence level was up two notches. Notice that the trendline breach and flag in VIX lines up perfectly with the respective features in SPY from Jamie's post below.

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

After early weakness, POT retraced 62% from morning high/low. it printed 3 IBs, the last of which was NR7 with body in the shadow of the previous bar (red on red) - very bearish.

Normally on the ambush trade, we take half off when price approaches lower fib, but today the market was starting to rip lower, so hang on for 3 WRBs. Price carved out a hammer reversal stick at the 50% FE so I tightened stop. It ended up being just a pause, as price eventually tagged the 100% FE.

The SPY formed a mini flag after breaching its trendline, setting up a low risk short.

Bullish Flag - SOHU; C&H - CNQ

Several analyst upgrades to BUY from the watchlist - AAPL, BUCY, JOYG and SOHU was initiated as a buy at Citi. The others moved too fast, but SOHU paused to form a flag, so I jumped in on the flag BO. At the EOD these four stocks were the biggest % gainers on my WL.

CNQ gapped wide and filled. It eventually paused at resistance from Friday's high and formed a handle to complete the C&H setup. I exited as price approached 50% FE and resistance from last Wednesday.

Divergence in VIX and SPY

Jamie had a great short in the SPY late on Friday described at the end of this post. I shorted AAPL late on Friday based on the divergence between the VIX and SPY. AAPL was a WL stock that had shown relative weakness throughout the session - so the choice of AAPL was just a relative weakness play. However, the more important point is the divergence between the volatility index (VIX) and the S&P (SPY) on Friday afternoon. Following the rounded bottom pattern in the VIX 15min chart, the divergence region is marked with vertical lines. The flag action in the VIX was screaming to short something late on Friday. The VIX has been a powerful indicator/tool for me over the last few weeks.

Gap - MDVN, Gap Fade - ATHN, Ambush - SPY

MDVN, from the TI scanner, gapped up in late pre-market. The opening range leaves a long upper shadow, but clears daily resistance (blue line) on a closing basis. The next two bars are NRIBs in close proximity to rising 5 period EMA. This setup is very similar to the GIL trade earlier this week. Burn it to memory for future reference.

It's always a good idea to map out daily support/resistance of gapper candidates in pre-market and/or first 15-30 minutes of trading session. That's why I like the TI scanner - it tells me how many days of S/R are being taken out in pre-market price action.

ATHN, also from the TI scanner, had two support levels at $29 and $28. Buyers stepped in at $29. The opening range was solidly bullish and I waited for a break of ORH. It's important to watch carefully, for a close above the downsloping 5 period EMA just above the BO point.


SPY setup a perfect ambush trade. Took a partial as price approached the downsloping 50 SMA and exit balance on weakness following lower high. Price eventually retested sessions highs, but failed to close above, so I waited for confirmation and shorted the failure.

Technical Picture - Pressure

Markets gapped down on the open with steady pressure noted into mid-morning. The midday drift and new afternoon lows were met with muted interest so the bulls were able to able to put together a late day reversal with higher volume into the close.

Gold extended its BO gains as the $USD continued its slide. Commodities, many of which were extended, came under pressure, carving out evening star reversal patterns - agchem (MOO), steel (SLX) , coal (KOL). Financials held up fairly well.

No economic data tomorrow ahead of the long weekend, so it could be a slow day. ADSK - big earnings beat in after hours will be on my focus list tomorrow.

Ambush - Barrick Gold Corporation (USA) (Public, NYSE:ABX)

ABX, from the WL set up a perfect ambush trade. What is an ambush? Hubert Senters of Trade the Markets, uses this setup on a regular basis with gold and futures.

Place fibs from PDL to PDH or from begininng to end of last leg. Price retraces between 50-62%. Ideally, price should not close beyond the 62% retracement level. Look for a reversal back to the base, and sell half.

POT gapped wide and printed WRB on huge volume. The second bar was bearish with no overlapping bodies and closed at base of the round $ number, so I went short as there was little or no chance of a retracement. Partial at gap support and whole $ level. Stopped out on balance. Late in the session POT head faked lower, filling the gap from Monday, and setting up a fast move (long) into the close.