Technical Picture - SPY - Weekly Gap Resistance In Play

The SPY's bearish gap resistance from last October is in play. You may have noticed that the markets started to get really choppy in late afternoon. That's triple witching OPEX starting to kick in.

Technical Picture - New Recovery Highs (Again)

Today's extension to fresh 11-month highs reflects continued momentum/short-covering off of yesterday's reversal higher, after today's initial pullback proved once again to be short-lived. The dollar initially tried to rally (early weakness in S&P), but couldn't hold. Bernanke's well quoted statement midday "from a technical perspective, the recession is very likely over at this point" probably helped the bulls push prices higher. Leadership was provided by commodities and industrial related groups, with a reversal lower in the dollar fueling gains in energy and metals, and new frost concerns driving the agchem complex sharply higher (see my POT trade below).

Many traders, like myself had been anticipating a more meaningful market correction, but it just hasn't materialized, as pullbacks continue to be short and shallow. Despite the overbought view of the markets, we will likely continue to drift higher until a catalyst can come up with the power to turn things around.

$USD vs. SPX sums up the technical picture.

Technical Picture - New Recovery High

New recovery highs for the S&P and Nasdaq, unconfirmed by the DOW. As mentioned in the last two posts, I think we are done and we need to correct, however, I'm waiting for a clear signal to short the market and look for shorting opps. Today, the momentum scan was quite active on the long side, so I'm not going to fight the tape.

DNDN - takeover chatter propelled the stock out of its base in early trade. A long period of consolidation made this stock attractive for the second leg up. I didn't want to overshoot the expected target so I placed my fibs from the last consolidation to the tweezer top. Price held the ambush zone as support and traded sideways, consolidating the early move through time as opposed to price.

UA gapped and consolidated in an orderly fashion. Extension stalled at 50% which was not totally surprising, given the run up in price over the last few sessions.

Technical Picture - Win Steak Ends at Resistance

As discussed on Thursday, preliminary targets on S&P have been attained and now we anticipate a retracement to either the trendline or the base at 950.


IBD says a weaker dollar and inflation fears are propelling gold higher. Really?, I thought gold bugs were pushing gold higher. The $USD chart still has me scratching my head, because lower prices are not being confirmed in the MACD.

Technical Picture - Preliminary S&P Target Attained

My preliminary target for the S&P was attained today as depicted on the chart above. That's not to say were done, we may edge higher, but I would expect some profit taking very soon. A pullback to the trendline or the base (950) would be healthy before the next leg up.

AEM broke out of yesterday's late day consolidation on the open. I waited for the pullback and jumped in. Took a partial when it stalled at $68.00 and I'm holding the balance overnight. From the 15 min. timeframe, we see that AEM looks well positioned to retest Tuesday's highs. That's a round $ level with long-term resistance, but this is a momentum play with lots of volume, so it won't surprise me if AEM can push through.

Retracement Trades - Goldcorp Inc. (USA) (Public, NYSE:GG)

GG was short at the base of the retracement zone we talked about last night in reference to ABX. I switched from ABX to GG because ABX was halted pending news and gapped much lower when it finally did open. Notwithstanding more bad news, gold in general should form a short-term bottom around these levels and we'll be watching for another long entry to set up.


The 60 minute chart of the SPY above illustrates support/resistance and congestion zones. It was clear from the lack of momentum on today's rally that resistance at $104.00 would hold. Just wait for a failure. If price holds within 2 upper blue lines, it could form an inverse H&S, and possibly break out of $104 on next test, but I'd like to see a gap fill beforehand.

On the 5 minute chart below, I missed the C&H on the way up, but I was ready to short the head fake at $104.00. Take a partial at the base of the C&H and exit balance at low end of congestion zone (green lines).

Technical Picture - Gold Pauses

Markets gapped up on a weaker $USD with energy (solar)/commodities leading the session. Gold gapped wide and participants took profits as prices tested resistance. Solar may have bottomed - FSLR and ENER had impressive runs today.


I closed my swing trade in ABX as price gapped wide and immediately started to fade. I entered long on an ambush setup, but after breaking out of the Fib. retracement zone, it started printing lower highs and fell back in. Scratch the long and short.

As you see from the wider view below, ABX is on the edge of the retracement zone so I'll be looking for a long/ambush trade to setup tomorrow. If you missed the BO last week, this could be a good opp.