Good Daily Charts to Study

Jamie mentioned POT (top chart) in his Technical Picture post last night. It broke through resistance right on que today. AGU (bottom chart) is in the same industry group - agricultural chemicals - and also broke out with a trend day. Compare and contrast the two charts. Both were excellent daytrading opportunities today.

Edit: Note that POT reports on Thursday.

Technical Picture - Divergence

Despite the fact that the SPY was able to carve out new highs this week, the RSI continues to print lower highs, thus negative divergence of the RSI foreshadows that the rally may soon stall. Also, note that the $USD is starting to show some positive divergence to lower prices. The Lehman gap fill is $110.34, another important technical level to keep an eye on going into next week.

Earnings this week - AAPL, STLD, AMZN, AMGN, SNDK, BRCM, CAT, EBAY, POT, BTU, FFIV, GILD, GENZ, TXN.

One chart that I found significant this week, was tech bellwether, INTC (not pictured), which had good earnings and favorable guidance, yet it was a fade. Are we selling the news?

POT which has not participated in the last couple of legs of the rally, appears to be setting up to BO of this narrow trading range. But keep in mind earnings are on Thursday morning.

Positive Earnings

Based on positive earnings news from companies reporting yesterday and today (INTC, CSX, JPM, ABT, etc.), the market appears to be anticipating more positive earnings going forward. I followed the trend and focused on the top %changers from my core WL. FWLT gapped up, attempted to fill the gap, and then formed a small C&H. The C&H pattern is clearer on a 5min timeframe. I managed the trade and exits - partial at test of previous PP and remainder near EOD - as shown on the 15min chart below.

Short Side Vigor

Overall volume was light today (Columbus Day) as the S&P tested recent highs. Per recent comments, I have been favoring the short side at these levels. Yesterday I tried a short in NTES and ended up scratching. Today, my short side trades showed a bit more vigor. NTES responded much better than I expected. BIDU had a nice matching congestion pattern (looks like small H&S, but not at top of recent price action) that was good for a quick downside pop. Note that the first hour or so in NTES was also a matching congestion with yesterday's action.

Technical Picture - Retracement of Last Week's Sell-off

Despite last week's sell-off, prices managed to retrace most of the damage. The retracement took place on lighter volume and that is a bit of a red flag. Going into earnings season, we need to see some really stellar results and/or some uplifting guidance going forward.

From the weekly NASDAQ chart above we see some formidable resistance in play. However, as noted in last week's IBD, "historically, the first run-up after a bear market has gone for months without a 10% dip in the NASDAQ. After the bear markets of 1987, 1190 and 2000-03, the NASDAQ rose 22, 16 and 10 months respectively, before making a correction of 10% or more." We are now in month seven following the 2008 bear market and as noted, we are testing strong resistance.

And speaking of IBD, the current status is "market under pressure". Since the recovery off of the March lows, this is the fifth time that IBD has flagged the "under pressure" label. The previous four times, the market resumed the the uptrend within 4-8 trading days. Monday will be the eight trading day following the current label status.

Reporting this week -Tuesday: JNJ, ALTR, CSX, and INTC... Wednesday: ABT, ADTN, CBSH, HST, JPM, PFR, GWW, ATR, CCK, LSTR, SPTN, SLY, WDFC, and XLNX... Thursday: APH, BAX, C, CY, DRH, FCS, GS, HOG, HOMB, KNL, NOK, PII, PPG, SWY, UTEK, UMPQ, USAK, WGO, CBST, CYT, GOOG, IBM, MTG, PBCT, TPX, and UFPI... Friday: AOS, BAC, FHN, GE, GPC, HAL, MAT, PRSP, and SXT.



$USD holding support, but for how long? If $USD doesn't hold at this level, it could easily slip to $74.00.

Gold providing clear leadership on the weak greenback.

Transports are lagging - not a good sign.

Despite the Baird upgrade to outperform on Friday, RIMM still provided a decent shorting opp. As noted in the comments on Thursday, RIMM's retracement had been on very light volume, so it was ripe for shorting.

RIMM gapped up, but the momentum died after the first 20 minutes or so. The second 15 min. bar was very bearish. A lengthy sideways, deadzone type trade, eventually succumbed to the bears. NR7 was the trigger after price closed below 5 EMA. Buyers stepped in at whole $ level, but that retracement was on declining volume, setting up an ambush.

Gapper - Teck Resources Limited (USA) (Public, NYSE:TCK)

Last night I mentioned in the comments of the previous post, that TCK was a focus list long. As you can see from the daily timeframe above, it had carved out a solid base. Yesterday's NRB was the perfect pause before expansion. This is a high volume BO and I'm holding for a swing in my retirement account. The day trade in my trading account is outlined below.

This morning TCK gapped up with bullish opening range. Price retraced to the 5 ema on declining volume. Enter on break of ORH. Take a partial after 3WRBs as price approaches whole $ level. Exit balance as price approaches full extension.

Intraday Box Trade - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

EOD POT looks well positioned to form an inverse C&H. If not, I'll be watching for a double top as this stock is still weak (IMO) despite yesterday's gap.