Technical Picture - Wide Spread Weakness on European Banking Concerns

Concerns over the health of European Banks led to widespread selling on the open. Not surprisingly, banks (BKX) paced the ways down, giving back all of Thursday/Friday's gains. All but Gold was in the red by days end. Volume was light.

Banking concerns fueled money out of stocks and back into treasuries as depicted on the TLT chart below. Until the trendline is broken, I doubt we can have a meaningful rally in stocks.

Banking concerns stoked volatilty as the VIX gapped higher after testing four month lows on Friday.

And as expected the USD rallied versus the Euro.

Despite today's low volume retracement, we have to keep a close watch on the TLT, VIX, and USD to monitor the underlying strength/weakness/fear inherent in the markets.

Today's trading was light given the overbought conditions and general lack of setups.

Using the RSI price bars, I was able to catch a quick point in GS. Positive divergence to lower prices foreshadowed a trend reversal. GS forms a mini base and I used a buy stop order above the base to get long.

MON broke the downsloping trendline, but failed to hold. Now it should retrace into the support zone/5 day MA and we'll see if it can do something from there.

NTAP - two pivots into the $45.00 base. Needs to consolidate/retrace back to first level support. As you can see from the monthly timeframe below, key resistance dates back to 2000.

Technical Picture - Markets Extend Recovery Rally

The weekly S&P chart above shows a bullish tweezer reversal and bullish engulfing bar following three consecutive higher closes Wednesday through Friday, not unlike the July low reversal.

Narrowing the view to the daily using the SPY, we see that last week's trend reversal was accompanied by two bullish gaps in response to better than expected economic data. Friday's jobs data was the first respectable report in four months. Price gapped up and rallied into the 10:00 hour, reversed for a half gap fill fill, before trending near the opening range highs in afternoon trade.

Looking ahead, initial resistance is the unfilled portion of the August 11th bearish gap, highlighted in pink, followed by the congestion zone at resistance in the $113.00 area. A healthy market needs the time to digest last week's gains before attempting to break higher.

$USD weakened as stocks strengthened. Testing first level support.

Financials rallied off their lows last week. GS finally decided to participate on Friday. GS rose to the top of the leader board in early trade. Using the RSI price bars helps pinpoint the best entry as depicted below. Unfortunately, the trade was stopped out on a sudden sharp retracement, well ahead of the target.

Continued strength in the Agchem sector approaching major resistance.

MON one of the weaker names in the Agchem sector, reversed in the ambush zone. As we can see from the 15 min. chart below, MON carved out an intraday C&H pattern. After gapping up Friday, it retested the base and rallied into the close.

I'm following this one closely, to see if it will break the downsloping trendline and participate in the sector rally.

AGCO (farm machinery) has carved out a C&H on the daily. It needs to consolidate last week's move before breaking out. Keep it on the Focus list.

Technical Picture - Trend Reversal

September got off to a strong start as participants ignored the weak ADP data in favor of strong economic data out of China and Australia overnight. At 10:00 EST, equities squeezed higher on much better than expected ISM data. Most of the day was spent in a narrow, sideways action in the upper end of the day's range, with fresh session highs hitting the tape towards the end of the day.

Sector leadership was virtually across the board with oil, industrials, and healthcare leading the way. Down ticks in treasuries, gold and gold miners. Volume was higher than yesterday, resulting in an accumulation day. Tomorrow's economic calendar is full, with the all important jobs data on Friday. Let's see if we can hold on to these gains into the long weekend. We need a follow through day in the next 2-3 days in order to confirm a trend reversal.

The CRM bull flag (Darvas Box consolidation) broke out on high volume today. On the 15 minute timeframe below, I left my Fibs from the earnings gap day intact. The opening range moved into the upper Fib. line. After a short consolidation, price broke resistance and trended higher. Partial profit and swinging the balance.

SU on the TSX broke resistance in early trade and trended all day. This is a swing trade in my retirement account. Preliminary target is top of triangle, secondary target will be established if we successfully BO of the chart pattern.

TCK, again the TSX chart which has much cleaner lines than the NYSE TCK chart. We closed at resistance of the trading range. I'm looking to see if we consolidate in the upper portion of today's range and then B&B, targeting the Fib extensions.

Technical Picture - Bearish Gap Resistance Holds

A positive start to the session following slightly favorable jobless claims, quickly turned negative as the S&P couldn't push through gap resistance. Notice how we haven't managed to regain the 5 day MA (130 period MA on 15 minute timeframe) since we lost it on the double top last week. Fading the 5 day MA has been a successful trading strategy thus far.

GDP at 8:30 EST, tops tomorrow's economic data and events. I hate it when those Federal Reserve guys speak during the trading day. Anyway, BB is scheduled to speak at 10:00.

My best strategy over the last couple of days is long gold and silver (safe haven), as they crossed above the 5 day MA.

CRM is forming a Darvas Box, consolidating the earnings gap, in the upper half of the range on declining volume. Today's range was the narrowest since gap up. Keep this one on the focus list and wait for price expansion.

Technical Picture - Oversold

IBD changed their market outlook from "Uptrend under pressure" to "Market in a Correction" tonight following another distribution day.

As you can see from the S&P e-mini futures chart above, if we can't hold today's low as support, watch out down below. There's not much support between here and the July lows. After hours, Irish debt downgraded from AA to -AA by S&P.

Since the last FOMC meeting, treasuries have broken out and continue to rip higher (TLT chart above), leaving the bears firmly in control of the equity markets.

Oil inventories tomorrow at 10:30. We are approaching a support zone. Let's see if the over-supply issues start to correct.

The markets/stocks are oversold, so my strategy lately, has been to focus on leaders that continue to run on their own momentum. CRM has been a daily trade since Friday. ISLN looks poised to move higher tomorrow.

Technical Picture - Gap Fade

The opening gap was faded 30 minutes into the session. A gap fill held into midday, followed by a few hours of chop, and more selling into the close. Support at Friday's lows, followed by the 62% Fib. retracement of the July-August rally. Existing Home sales at 10:00 EST.

APKT was a failed BO.

CRM retraced 50% of Friday's trading range. Wait for tradable setup.

ISLN - shallow retracement and retest of the day's highs.

Technical Picture - Markets Mixed

New August intraday lows for the DOW and S&P were not confirmed by the NASDAQ, leaving the door open for some upside to start the new week. No economic data tomorrow. Markets are somewhat oversold.