Range Contraction, Range Expansion

Per Jamie's post above, HCPG definitely had some nice picks today. If you do not have an evolved scanner and a good eye for picking the best setups, a service like HCPG can help orient you in the right direction.

A key to these nice setups is to look for range contraction in an active market and at appropriate zones on the daily chart. BIDU had broken above a key pivot level on the daily chart (bottom) and then contracted for a couple of days. Today BIDU was very active (hitting my intraday scanner) in early trading and then setup range contraction intraday (symmetrical triangle, penant). The setup led to 3 WR 15min bars (upper chart), plus a tad more. An aggressive trader might have entered earlier based on the daily setup.

Technical Picture - Testing the Base for a Breakout

Earnings this week - Monday: HAL, JCI, BSX, TXN, and ZION... Tuesday: AKS, BLK, CAT, KO, FCX, LMT, MRK, RF, SGP, STT, AMTD, UNH, AAPL, GILD, STX, SBUX, and YHOO... Wednesday: MO, BA, DAL, GENZ, MS, NTRS, PFE, PEP, WFC, EBAY, ISRG, MOS, and VMW... Thursday: MMM, T, BMY, CME, EMC, GR, NOC, POT, RTN, UPS, AMZN, AXP, BIDU, BRCM, BNI, MSFT, and NFLX.

We need to see a few more big beats like INTC and GS last week, otherwise, the rally will stall and/or the BO will fail.

Cup & Handle - Apple Inc. (Public, NASDAQ:AAPL)

AAPL gapped up and rallied for the first hour, then consolidated the move with a shallow, rounded retracement, which ultimately formed a C&H base with NR7 (NRIB) as the trigger. Enter long on break of base or outside bar (OB). Use the OB as your stop. Since this is a chart pattern, we place our fibs from the low to the high or base of the pattern. On a measured move basis, the expectation is a 100% move.

I took a partial after three consecutive WRBs as price came into the 50% FE. Once price closed well above 50% FE, I tightened stop to previous bar low and I got stopped out. Price eventually tagged $152 which was just 20 cents shy of measured move target.

INTC retraced into the r-zone of the last leg up (previous day) and managed to close back above MAs for another extension of the earnings gap. I closed the position when it printed a red star. The thing about slow moving, low priced stocks, is not giving too much back.

What's Up with Gold?

After watching this video from the folks at INO, I'm excited about the gold chart again. Look carefully, and you'll notice that spot gold bounced after finding support at the 62% retracement level ie. ambush zone.

Symmetrical Continuation Triangle - SPDR S&P 500 (ETF) (Public, NYSE:SPY)

SPY formed a symmetrical triangle (usually a continuation pattern) and rallied.

Market is overbought. GOOG earnings beat by $0.27 but investors dumped the stock, which gave up the day's gains in after hours trade. IBM fared better, but the stock is really extended.

Technical Picture - Accumulation

The bearish H&S top on the S&P has been invalidated with today's advance as we just edged and closed above the right shoulder. Institutional buying was in play today.Tech bellwether (INTC) reported better than expected earnings and guided revenue higher thus igniting early strength. $USD weakness helped the energy/commodity complex. GS and BIDU staged technical breakouts.

Don't forget that this week is OPEX. JPM reports tomorrow morning.

GS Goldman Sachs Group, Inc. (Public, NYSE:GS) Stages Technical Breakout

GS staged a technical breakout on good volume as we can see on the daily timeframe above.

GS opened with a gap, formed a bullish flag, so we look for a measured move of 100% of the pattern. I placed my fibs from the late day low to the ORH. I entered long as the flag broke and price moved quickly upwards. Midway to the target, it started to slow down. As soon as price and the rising 5 EMA came back together, price accelerated towards the target.


The SPY gapped up and broke quickly, but I waited for the 5 ema to catch up to price before jumping in. Price extended 50% from PDL to ORH.

Yesterday we said that POT had to break above the capitulation base (blue line) before we would contemplate a long entry. Today it gapped into the base and the initial candlestick action was very similar to yesterday, but eventually, it carved out a mini C&H pattern. Here again, we are looking for a measured pattern move of 100%, so place fibs from low to high of C&H pattern and exit at target unless it forms a bearish reversal pattern along the way.