Technical Picture - Weak Close

Markets extended in early trade. The pullback after the early session move to new multi-month highs reflects weakening momentum with the long upper tail creating a weak candlestick. However, weak stick patterns have been seen several times over the last month or so with no follow through pressure. Watch for consumer confidence data at 10:00.


Initially, it was hard to know which direction POT's narrow price contraction would break. I was prepared to take the trade either way, but since this is one of my weaker WL candidates, I was satisfied with the break lower for a gap fill.

Summer Time - Basic Multi-TF Patterns

In slower summer time trading, I often find it helpful to look at a longer period intraday chart. It can cleanup some of the noise and reminds me to be more patient for a good setup. I found this setup today on a 30min chart (left chart). The daily chart (lower right) is extremely weak compared to the broad market and has a very interesting pattern on a longer term daily or weekly chart. After the weak OR, the intraday volume contraction was confirming the bear flag and is visible on the 30min and 15min (upper right) timeframes. Range contraction (NR7/NRIB) followed by a hanging man marked the end of the bear flag pattern.

Technical Breakout

The market staged a technical breakout on better than expected Existing Home sales and a positive economic assessment from the Fed Chair. Narrow range trade at range highs dominated for several hours before a later afternoon push to a fresh session high. The upside extension allowed all the market indices to establish new 2009 close/intraday highs.

However, that left the CPC way too bullish and prices are popping well above trend channels. Futures are higher as I write this post. Target S&P 1050 on this last thrust. I see resistance there and the smart money is likely to takes profits which will result in a much needed correction back to the trendline.

V forming a cup & handle.

Technical Picture - Buying on the Dip

Bulls defended support off of a weak open leading into gap fill. Limited downside following the gap fill as prices coiled and contracted leading to expansion midday. We may attempt to fill Monday's gap before OPEX.

Crude has formed a solid base if the dollar rolls over here.

The SPY is a perfect example of coiling - NRIBs (NR7) leading to expansion. Burn the chart to memory on multiple timeframes.

TGT formed a C&H but didn't deliver the full measured move. Daily chart looks good if we can consolidate the earnings gap and try again.

Technical Picture - Bulls Defend Support

Prices opened slightly weak, but the bulls defended support and the early thrust held into the FOMC, at which point the bears came in strong, but not strong enough as you can see from the SPY chart below.

An inverse H&S pattern developed on 1 minute chart and a short squeeze ensued. That didn't last long and the bears pushed prices back down into the close. Still we end the session with a bullish engulfing stick on the daily.

One of my strategies going into the session was long oil/commodities after the run up in the $USD. Luckily, oil didn't have as wide an opening range as most other stocks on my focus list, so I was able to get in for a fast trade.


SOHU and SNDA look compelling as short opps.

Technical Picture - Profit Taking

Sellers controlled the session from the open, with some retracements in the afternoon, followed by a push back to morning lows EOD. Volume was low ahead of the FED, and/or summer doldrums.

FOMC minutes tomorrow afternoon at 2:15 EST. Crude inventories at 10:30.

JPM was a planned trade as discussed last night. Not a great setup, but I set a sell stop order on break of ORL as price contracted between the two blue lines. The second trade was an ambush, but it really started to feel like the bulls were going to take the close, as usual. Just managed to work in the final minutes of the session.

NRIB (NR7) - Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

I think the RIMM trade is self explanatory. If you're not familiar with the power of NR7, read this post from last week.


JPM breached the top of it's steep upwards channel on Friday. Today, it carved out a higher high with negative divergence of the RSI, so I put in a buy stop order on break of blue line. I'm keeping this on the focus list - looking for a correction back to lower channel line.