Technical Picture - Consolidation

The QQQQ's are the only major ETF (DIA, SPY, QQQQ) which have yet to close above the Sept. 30th highs. I know that the Comp has, and it is obviously more important than the ETF, but the fact remains that the Qs have not confirmed a breakout at this late date, which leaves us vulnerable to some corrective price action.

Tech malaise is obvious from the price action of many leading stocks especially in the cloud space. Many of these names are very weak and close to breaking supports. Ags are going into a bubble as crop prices move to limit highs. The corn chart below looks to be developing a H&S top.

That's all I want to say ahead of the FOMC tomorrow.

NQ Emini futures trade into the close. The first clue was the lower high after the trendline breach.

Notice how futures have moved lower AH.

The trade of the day was HCPG pick. I was wary of long setups today, so I waited. The NRIB NR7 setup was too good to pass on. Low risk of about $0.50 generated a reward close to 9 times. Sweet!

CRM - early weakness finally paused allowing for a decent entry. The target was the base it formed after capitulating last week. Took a second entry off of a NRIB but I bailed on the first sign of a reversal.

Day Trade Analysis - AGCO, MOS, CAT, JOYG

Agribusiness names gapped up on the release of the USDA's bullish crop report. AGCO (agri farm equipment) had a bullish wide opening range. Price consolidated the gap through time in the upper portion of the OR at the base of the weekly pivot R2. The NRIB was the trigger. Place stop a few pennies below outside bar.

Wait for price to trade within the BB (Bolinger Band Std. dev. 2) to avoid lengthy consolidations, or worse, sling shots back to the retracement zone. Took a partial at 50% FE. Exit balance when price stalls at the whole $ level.

At the EOD, AGCO looks like a failed BO (shooting star). Expect price to retrace to gap support and possibly gap fill.

MOS - another Ag, breaks out of gap flag just below the weekly R2 and stalls, forms a handle and then goes on to extend to the measured move target.

CAT - Daily BO at $80.00. Been stalking this one a while.

JOYG was a HCPG newsletter pick at the daily spot (blue line). Here again the BB keeps us from entering until the initial breach has consolidated and JOYG is ripe to move higher. Took a partial at weekly R2.

Technical Picture - Modest Gains on Disappointing Jobs Data

Markets rallied to end the week despite weak jobs data. Participants were somewhat relived that the brunt of job losses were mainly due to gov't layoffs and that the weakness could engender further quantitative easing. That speculation added further weakness to the $USD, thus fueling a rally in stocks and the DOW was finally able to close above 11,000, a level not seen since five months. The weak dollar helped stoke the CRB index up 2.7%. Leadership was provided by the GKX + 6.3% (agribusiness) on the heals of a bullish USDA crop report, and the GYX (industrial metals) + 3.0%. Volume overall, was generally lackluster, implying that many investors are sidelined, awaiting real proof in terms of earnings, which get underway next week.

Companies scheduled to report earnings next week include:

Tuesday: FAST, ADTN, CSX, EXFO, INTC, and LLTC
Wednesday: ASML, HST, IGTE, JPM, APOL, and SPTN
Thursday: CBSH, FCS, LSTR, MTOX, PGR, SWY, GWW, AMD, GOOG, and JBHT
Friday: FHN, GCI, GE, GPC, INFY, KNL MAT, and WBS

The economic calendar is also full Thursday and Friday. Monday is Columbus Day (Canadian Thanksgiving) so expect light volume. FOMC minutes on Tuesday.

I'm assuming that prices can continue to drift higher short-term on continued dollar weakness. Next significant level of resistance on the SPY is $117.50-$118.00. However, the dollar could stage a relief rally anytime as it approaches support.

P.S. CBS 60 Minutes - Steve Kroft is doing a feature on HFT (high frequency trading) tonight.

Technical Picture - Markets Mixed Ahead of Jobs Data

Uncertainty ahead of tomorrow's jobs data. New highs in pre-market/open (better than expected initial claims) failed as participants didn't want to get ahead of themselves. The DOW 11000 psych level was tested on the open, but the $USD was bid higher and gold, oil, and commodities sold off.

The choppy pullback and strong retracement off the lows implies limited selling pressure. However, at the end of the day we have either a hammer or a hanging man. Employment data at 8:30 EST, will set tone.

Emini futures trade. Short on failure to hold support. Partial into next support level (1st tick reading below -1000) and exit balance as price extends 38% and 2nd tick reading below -1000.

The $USD caught a bid after gapping lower on overnight weakness. Participants were quick to take profits in gold/silver, oil, and commodities. Minor support level in $USD coincides with more significant levels in GLD and OIL. Not sure we're going to get a big lift in the $USD from this level, so we may see higher GLD and OIL in the short-term.


Corn setting up an ambush, could weaken Ags.
Watching Broker/Dealer for B&B.

Banks basing at key technical level.

Technical Picture - Broad Based Rally

Last night's post was entitled "Broad Based Selling" and today we had the complete opposite. S&P futures perked up in pre-market on news that the BOJ was cutting interest rates to zero and planning to stimulate through the purchase of gov't bonds. The speculation is that the U.S. will follow. Okay, we'll take it, but I'm not sure what it all means for future market strength. The dollar got crushed sending gold, oil, and commodities higher. By the end of the day all three major indices - SPX, Comp, and INDU had closed above last week's failed BO. My only regret is that the momo move occurred on my birthday which was a real distraction of constant interruptions.

HCPG picks GS, NUS and SU fueled the session's best trades. My mindset was so bearish after yesterday's session that I had not planned on the long side. BTW, good post about trading strategy on HCPG blog tonight.

GS formed a nice base within the OR. I took a partial at the daily spot and let the rest run. Price stalled at the 50% extension of the previous day's range.

NUS formed a mini C&H within the daily base allowing for a low risk entry.

SU was already in my swing account so I just added more on the BO. Resistance at top of triangle where I plan to lock some in.

AGU and MON shorts were aborted. AGU short at $76.00, locked in half a point, after which price reversed and carved out a handle, so I had to get out.

MON short worked for about 30 cents and then also carved out a base. So I was stopped out.

Technical Picture - Broad Based Selling

After the initial choppiness, bears took control and broad based selling ensued. As we can see from the SPY chart above, the bulls were able to defend last week's lows as support. However, the bears were effective in keeping the price action contained for most of the afternoon.

As discussed in last night's post, the $USD was testing support vs. Euro testing resistance. Today, the $USD bounced, weighing on commodities and gold miners. Crop futures were weak in pre-market putting further pressure on Agribusiness names. Early strength in financials finally gave way. Little was in the green except Casino, and REIT IYR.

Watching to see if today's lows will hold. If not, expecting a complete fill of the Tepper gap will attract buyers.

AGU - short the break of Friday's lows. Partial at gap fill and cover balance at support. Corn futures bounced today. I didn't take the counter-trend trade. Instead, I'm waiting for an ambush setup in the 50-62% fib. retracement zone of the last leg down at point 5 on the chart above.

TSL - Short break of ORL on the baseline - solar sector weakness in early trade.

The AAPL trade setup as planned, but didn't extend as planned. Price stalled on the minor support line and wasn't able to follow through in the afternoon. Notice how price reverses each time it hits the downsloping 50 SMA (green line). I expect more of the same tomorrow.

GS formed a bullish morning star reversal pattern at the full retracement of Friday's range. Entered long above 5 day MA (orange line) which is flat. Took a partial after a half point because the markets were so weak.

MON - still flagging. I want to short MON below $47.50 for a target trade to $45.00 support (July lows). On a related note, MOS missed earnings by $0.05 and trading lower in AH.

Technical Picture - Sector Rotation

A handful leading tech names (AMZN, NFLX, PCLN, BIDU) slid on higher volume and closed near the lows of the day. Apparently, institutions are dumping some of the end of quarter window dressing names and rotating to other sectors. More likely, they are lightening up, hoping to average in at better prices.

One name that looks vulnerable to more selling is AAPL. It held support on Friday's inside day, but the 15 min. timeframe is basing and ready to break. If it can't hold the round number $280, it will likely swoon in the area of the daily 20 SMA.

Oil has benefited from sector rotation and is now approaching resistance as depicted on the chart below.

Gold has extended 50% since breaking out of its base. Gold acts as a hedge against the falling $USD which is currently testing a support zone. The USD may pause here, but I don't foresee a huge bounce based on the oscillators.

Gold, on the other hand is a concern because most large cap gold names are not keeping pace with GLD. The GDX broke out and stalled. What's up with that? Is this an interim top?

$Euro testing resistance.

The strongest sector from the July lows has been Agribusiness. As you can see from the chart below, the steep trendline has been broken after price tested yearly highs. Crop futures such as corn are correcting in a big way, so we expect further pullback for Ags.


DE and AGCO are pulling back to trendlines.

POT is pulling back towards Gap support.

MON is bear flagging and looks like it wants to retest the July lows.

Financials are still lagging, but the broker dealer chart below is setting up nicely. I like how the MACD is on the neutral line, coiling before a potentially big move.