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Technical Picture - Bears Own It

A gap down open followed by broad based selling. Actually, I was caught slightly off guard as I was expecting this sell-off to happen on tomorrow's jobs data.

The VIX had been forming a bullish flag and today's selling was a good opportunity to trade VXX.


TLT formed a bullish flag (gap is the flag pole).

AGN, courtesy of the Trade-Ideas momentum scan, formed a bearish tower top as it struggled to hold R1 weekly pivot.

Flags - Research In Motion Limited (USA) (Public, NASDAQ:RIMM); Baidu, Inc.(ADR) (Public, NASDAQ:BIDU)

RIMM formed a perfect bull flag. Entry on break of whole $ level. Price stalled midway to the 50% extension. It failed to hold the base as support, but snapped back quickly. Price finally reached the weekly R2 level .

Since the markets are in a confirmed bearish correction, lower the expectations on long setups. Most trades are not going to reach full measured moves in this environment.

BIDU, also a bull flag setup. Entry on break of hammer reversal bar. Then a lot of sideways chop, which held the weekly R2 pivot as support. Finally, volume kicks in and price manages to take out the ORH. Exit as price approaches round $ level.

Another try with GS generated another failure. The setup was an ambush play with support of 20 EMA. The trade was slow. Volume contracted as price attempted to retrace. Too much supply and the stock started to roll over.

Day Trade - Canadian Natural Resource Ltd (USA) (Public, NYSE:CNQ); Cephalon, Inc. (Public, NASDAQ:CEPH)

CNQ formed a C&H as depicted by the Fibonacci or inverse H&S at the blue line. I entered above the blue line but set my Fibs according to C&H pattern. Premature exit on the first sign of weakness.

CEPH formed a flat base over last week or so as depicted by blue line on daily chart.

Entry on break of handle on 15 min. chart below. Exit on weakness after stock forms tweezer top reversal pattern.


GS and POT also had similar bases, but did not extend in the desired fashion. So 2/4 isn't bad given that neither GS or POT generated a loss. POT looks promising for tomorrow. Also on the focus list for tomorrow is this box play in AMZN. On the daily we have a tweezer bottom reversal setup.

Day Trade - Toyota MTR CP ADS (Public, NYSE: TM)

Following the HCPG Blog and sampling a couple of their subscriber service emails has made me focus more on trading S/R at key MAs. If you trust the setup on the daily sufficiently to enter at a price extension/extreme (but at S/R where a reversal/pause is likely), you can sometimes get amazing entries. Today for example I had a great entry on TM (daily left, 5min right) off of the 200 day SMA. The nice thing about a good first entry is that it gives you confidence to reposition or add on the first retrace.

Edit: For the order fill highlighted, I intended to highlight my initial short fill (avg near 80.50) but instead highlighted the closing of a partial long position carried overnight. The previous day's long was initiated following a gap up and triangular consolidation breakout. It ran into stiff resistance at the 200 day SMA. That is how I knew that price level was in play.

Technical Picture - Market Correction

According to IBD, the seven nastiest bear markets had similar characteristics:

• rebound of 51%-101% before correcting;
• correction of 10% - 39% before starting the second leg of the uptrend.

The Nasdaq's 2009 rebound went as high as 83% and the S&P, a touch over the minimum 51%. There's been no significant correction since the rebound started so we are due for one. Look at the 200 DMA as a potential target or use Fibonacci retracement tools.

If you're not short now, look to get short on the next bounce.

Technical Picture - Bears Own It

The breach of the ORL which coincided with the daily trendline set up the perfect storm. Broad based selling on heavy volume (institutional) into midday. The 50 DMA held as support, but still we closed near the lows. We aren't too oversold just yet, but soon. Oh, and we've given back the entire YTD gains.

GOOG earnings AH didn't impress, stock is down 30 pts.


SPY trade - Lower high is the tell. Breach of trendline is the trade.



H&S patterns for GLD and USD (inverse).


The VIX volatility index made a sharp move higher.