Technical Picture - Markets Mixed

The S&P broke support of its prior two day trading range with the 10:00 release of the Philly Fed data (5.1 vs. 10.1). Price swooned, but gap fill support held. Prices eventually retraced back to yesterday's range in lackluster fashion. And just when the bears regained control, heading for a weak close, news that BP had managed to stop the oil flow and that the SEC was going to release a statement (potential GS settlement), the market reversed and erased all of its losses. Hallelujah!

Futures holding up well after hours despite GOOG's earnings miss. CPI data in pre-market and Michigan sentiment at 9:55. BAC, C, and GE earnings in pre-market. AAPL conference to explain fix for iPhone 4.

Ag/Chem was the clear winner of the session with POT pacing the way. A weaker dollar contributed to the strength, but the key factor propelling Ags higher are crop futures which were solidly in the green again today. The high heat in corn growing areas is another significant factor. I never thought I'd be following crop and weather futures.



The POT entry is just above the previous two day trading range. It still had plenty of room to move prior to hitting 50 DMA as opposed to AGU which was testing 200 DMA.

Took a partial at the 100% Fib. extension.

By EOD it tagged 150% level.

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Technical Picture - Rally Testing Key Levels of Interest

Another accumulation day after a solid start to earnings season. Price is now testing the downsloping trendline and the 50 SMA.

The S&P has rallied 8.8% already this month from intraday low to high bringing the numerous technical levels of interest into play. Despite the extensive six day surge, however, the market has a catalyst after hours (INTC earnings) for further gains in early trade Wednesday. An initial resistance above is in the 1105/1107 zone with a more important area at 1112/1115 (200 SMA/50% retracement of April-July slide).

Chips stocks should rally back to the top of the recent trading range.


Euro continues to show strength vs. $USD which breached its trendline on closing basis today.

Expecting Gold to breakout on next test of trendline.


AGU - Good example of one of my favorite leading indicators - MACD divergence. Positive divergence of MACD to lower prices foreshadowed a reversal. Price reversed sharply and has come into resistance of 200 SMA. I'd like to see a shallow retracement (38%) for entry of a swing trade long.

APKT forming an ascending triangle.

Technical Picture - Reversal Day

Today's reversal comfortably recaptures the baseline of the May/June lows on higher volume which means accumulation.

We may have put in a bottom last week when we tagged the the 38% Fibonacci retracement of the March 2009 lows to the April 2010 recovery highs. That would be a normal retracement in a strong uptrend. Technically, the markets were oversold and we were due for a relief rally. The lack of news and data today, seemed to set the stage for a bounce. But, we need follow through in the coming days, in order to confirm today's action as a key reversal day. As depicted on the SPY chart below, we closed at the bearish gap resistance level. Tomorrow's jobless claims and retail sales data will set the tone.


Oversold commodities got a boost from a weaker dollar. Shorts got squeezed as the morning strength persisted into the close. MOS and MON were leaders in the Ag chem sector. MOS paused to consolidate the initial thrust, setting up a solid base for the second leg up.

Technical Picture - Former Support Acts as Resistance

The first chart is the 15 min. timeframe of the E-mini futures. The E-minis formed a bullish cup&handle overnight. The pattern reached full (100%) extension in pre-market. Despite the big move, it managed to rip an additional 50% in early trade.

That turned out to be the end of the move, because former support from the May and early June lows came into play. The bears stepped in, slowly at first, but eventually managed to push prices all the way back to the base of the C&H pattern.

So, the first test of resistance (former support) holds. Now SPY prices are trading in a narrow range between today's high and Thursday's low, which marks the 38% retracement of the March 2009 low to the April 2010 recovery highs.


The $USD is testing its trendline as support.

Gold fell sharply last Thursday. The $USD and gold were strong versus the Euro, but now that the Euro has bounced, the gold hedge is out of favor. The Euro will likely consolidate and retrace some of the move soon.



ABX testing its trendline. Bear flag developing.

AMZN - Bear flag forming.

Double Top - Amazon.com, Inc. (Public, NASDAQ:AMZN)

AMZN formed a bearish double top pattern over the last eight months, as depicted on the chart above. Yesterday, price broke out on strong volume. On a measured move, price should extend 100% of the depth of the pattern. However, we have the $100.00 round number at the 50% level and a gap fill around $94.00. A retest of the break-out point is common in these types of patterns (H&S, double and triple tops) allowing those who missed the initial entry a second chance to get in.

Today's day trade was an attempt to profit from yesterday's late session capitulation. The last two bars were a hammer and NRIB. Buy the break of the base. Look for a retracement back towards yesterday's recovery high and the downsloping 50 SMA.

The retracement was sharp, followed by a lengthy sideways chop until price met the 50 SMA and it proved too strong as resistance (matching consolidation patterns).


Short as depicted below for a round trip back to the base.

Technical Picture - Distribution

A weak open following dismal new home sales data. The markets bottomed near the 50% retracement of June rally in early trade, but the bounce lacked conviction ahead of the FOMC. Markets became choppy following statement, leaving us with a second distribution day. The lower shadow on today's candle could be a short-term bottom, but we need to see more conviction tomorrow, otherwise, it could be a pause before we move back to $107.00 on the SPY (see chart further down).



The $USD vs. Euro looks constructive.


Gold found support on the lower trendline of the ascending triangle, but here again trade became very choppy leading into FOMC. Watching to see the strength of a retracement as a leading indicator for the markets.

ABX found support on initial test of bullish gap from last week. Early thrust was promising, but resistance at pivot point P, held throughout the session.

CF forming C&H pattern on the daily - looks ripe for a break.