Swing Trader - NetApp Inc. (Public, NASDAQ:NTAP)

NTAP is forming a bull flag on the daily (Darvis Box on the 15 min. timeframe below) following last week's earnings gap. The earnings gap accompanied by the volume spike foreshadows higher prices. Swing traders can target full extension on the daily timeframe above when price successfully breaks the highs.



What is the Darvis Box?
Trading strategy developed by Nicholas Darvas in 1956-57. Look for stocks breaking out of a base on huge volume. After the BO, price consolidates in a very narrow range - Darvis box (price/volume contraction ahead of expansion). As price breaks out of the box, enter the trade. Darvis made $2M in approx 18 months using this simple strategy.

GOLD - Double Topping Pattern

Last week we noted that GLD gapped through December's bearish island and we said that the gap should hold as support, otherwise we could be looking at a double top for GLD.

So when GLD gapped lower on the open yesterday, we had a perfect shorting opp. I prefer to trade gold stocks than the ETF, so I traded GG as depicted below.

Technical Picture - Resistance

Technical levels of interest today were the high of Thursday's WRB at $117 and the death cross of the 20 EMA and 50 SMA around $117.40. After testing and finally taking out $117.00, price rallied to the $117.40 and abruptly reversed. It formed a narrow range consolidation at the trendline and $117 level, setting up the perfect short.

I commented about this just minutes before it broke in the previous post.

The futures trade continued lower in after hours testing this morning's support. Support/resistance levels are mapped out below. The red line represents the reaction highs from Thursday's attempted recovery following the meltdown.

As I write this post, $115 ES futures is holding as resistance. That could change overnight. Futures generally pick up momentum after midnight.


Gold gapped through last December's bearish island reversal on high volume. Now the island/gap area has to hold as support, otherwise we may have a double top pattern.

I saw profit taking in large cap gold stocks such as GG, AEM, NEM... in the final minutes of the session.

$USD continues to trend higher.

Oversold bias has retraced 50% of last leg down.

Technical Picture - Markets Oversold

The charts are broken and the markets are extremely oversold following last Thursday's dive. If prices break above the intraday recovery highs as depicted on the S&P futures chart below, we could get a tradable retracement.

Technical Picture - Distribution Day

IBD noted that the uptrend is under pressure this weekend, based on the number of distribution days in recent weeks. Friday's action saw distribution all round with the $SOX pacing the way lower on inventory fears as Samsung warned of a supply glut in the DRAM chip market.

The $SOX bottomed in Nov. 2009. April marks the 17th month of the current uptrend. Following the last two bear markets the chip sector rose for 18 and 16 months respectively before turning down.



Last August 9th, we noted that the inverse H&S bottom should reach full extension in April-May 2010. The time period for full extension should be equal to the length of time for the chart pattern to develop. So we're in the 9th inning and last week's S&P highs were just 30 pts. shy of the target as depicted on the chart below.

GOOG gapped lower on earnings with a spike in volume. Now it's testing support - this 3rd test could be the BO point.

Day Trade - Amazon.com, Inc. (Public, NASDAQ:AMZN)

AMZN was an earnings gap as discussed in Thursday's post. I placed my fibs from PDH to ORL. Price consolidated in the retracement zone and rolled over. Took a partial after 3WRBs and closed the position after AMZN carved out a hammer after tagging the weekly pivot P.

If the 20 EMA holds as resistance in early trade Monday, we could get a continuation play as we did with QCOM after its earnings gap.

QCOM was an earnings gap short on Thursday, but relatively disappointing given that we didn't get more sellers. The late day move up towards the downsloping 20 EMA proved to be resistance as it had no follow through and breached the PDL in early trade Friday for a gap continuation play.

I'll be watching AMZN for a similar setup tomorrow.

AAPL - Scalp trade - I knew that AAPL would attempt to BO of the base forming at the blue line. Once the triangle formed, it allowed for an early entry. Good thing, because the rally out of the base turned out to be lame.

Gap B&B - Apple Inc. (Public, NASDAQ:AAPL)

AAPL gapped up yesterday on a huge earnings beat. It took a day and a half to consolidate the wide gap and form a perfect B&B setup this afternoon. Sweet!

CYD formed a bullish handle at resistance. Rally formed a bull flag shortly out of the base, after which it reached full extension of the week's trading range. I'm targeting $25.00 near term if it can hold these gains.

STEC finally succeeded in breaking out of its base, but the trade was choppy to say the least.

QCOM - wide earnings gap but couldn't extend below $39.00.

AMZN rallied ahead of earnings, but at these lofty levels, the whisper numbers were well beyond consensus. AMZN issued an earnings beat of just $0.05 and guided Q2 in line, hence the stock gave back all of the week's gains after hours as depicted on the chart below. I'll be watching to see if the daily trendline gets taken out tomorrow.