Blogger

Sorry for the lack of posts over the last two days. Blogger was down for maintenance and when that didn't work, it was just down. Hopefully, it is back in business and I can post some charts over the weekend.

Tecnical Picture - Bounce Extends

The market has retraced 62% of last week's slide on lighter volume. As depicted on the the 5 min. chart of e-mini futures below. Last Friday's jobs report gave us a wide gap, but formed a bearish rising wedge which eventually led to a complete gap fill. Monday's action was inside, and today we were finally able to extend beyond Friday's high.



SLV has filled the bearish gap more or less, but the bounce has been lame in terms of time and volume. It took three sessions to retrace one day's losses. Very choppy intraday action - not my cup of tea.

USO has retraced 38% of its slide, but needs to push up to 62% in order to fill bearish gap.

$USD is consolidating after breaching downsloping trendline.

Most of my morning trades were scratches but the afternoon trades turned things around. I have been keeping an eye on RIMM's decent. Today, it breached $44.00 for a minute or two and then snapped back - head fakes usually lead to good trades in the opposite direction.

RIMM is technically oversold (daily RSI below 30) and was a good candidate for an oversold bounce (short squeeze).

Enter long on break of NR7 following head fake. See the volume spike as price takes out the obvious resistance levels (blue lines). This is where the stops get triggered and the squeezes occur. Keep on WL for follow through.

CTSH looks well positioned for an attempt at a gap fill following last week's earnings gap.

Technical Picture - Commodities Get Crushed Extending S&P Losing Streak

The CRB commoities index DBC chart above, fell 17 pts. (the most in 2 years) almost 7% on huge volume today. No commodity escaped the selling. Gold lost $40 (3%) while silver lost another 10%. Crude oil fell $12 (10%). Copper lost 4%. Part of the reason for the heavy commodity selling was a sharp rebound in the U.S. Dollar. Look at a chart of UUP and you'll see a huge move up on massive volume. Most of the dollar strength came from a falling Euro which tumbled 2% on the ECB suggestion the next rate hike was being postponed. The breakdown in commodities (and copper in particular) is especially troubling since it suggests that the global economy is slowing. That may also explain why bonds are rallying and stocks are correcting around the globe.

Furthermore, sector rotation over the past weeks suggests a move into biotech/healthcare, consumer discretionary, and utilities, all defensive sectors, which could indicate a near-term market peak.

The S&P is still on a path of lower highs and lower lows as depicted on the 60 min. chart below. The first support level held in early trade, and a nice rally ensued. We moved to the upper channel line, consolidated and then plunged, carving out another lower low. If the S&P doesn't turn around tomorrow, we'll have a failed pattern IMO. Inverse H&S pattern broke out, came back for a retest and failed.

Job data tomorrow in pre-market.


The NASDAQ is holding up well so far. The SMH is still basing out, but the biggest holding in the SMH is INTC which has been vertical since reporting earnings two weeks ago. Not sure the other components of the SMH are really strong enough to propel this sector higher.




We've been talking about an oversold technical bounce in the $USD for a while now, so today's move is no surprise.

Oil prices back under $100.00. Smart money trade of the day was short USO because oil futures (CL_F) were bear flagging in pre-market.


Just when many thought, it couldn't go much lower, it gaps down and rips lower on higher volume. SLV has given back three months gains in one week. Next supports are $33.00 and $30.00.

I'd like to see SLV gap well below it's lower trend channel line and then bounce. Today's gap down was well within the channel, so no trade. I tried some long when it capitulated into the lower channel line on a huge volume spike, but it didn't end well. A lot of aggravation for a scratch trade.

If you're hurting yourself trying to pick a bottom in SLV, it's not worth it. Margin requirements are being increased frequently and every increase is another leg down. When you see a bonafide short covering rally, you'll know it and you can jump in.

SPY - Levels of Interest

It feels like we will test SPY $134.00 in today as ES_F is printing a lower low in pre-market. All eyes are on this level. If it doesn't hold we have a small bullish gap support area just below. The level of strength of the kick back rally will be telling.

Also watch copper, oil and gold futures, all of which have sold off with volume in pre-market. This could be the flush we've been anticipating.

Initial jobless claims very disappointing 474K vs. 410k consensus.

Technical Picture - Correction In Play

After breaking out of a bearish rising wedge, the SPY corrected to the first minor support level and bounced in the last hour to trim today's decline. The Nasdaq corrected more sharply on higher volume resulting in a distribution day. Most technicians expect a retest of SPX 1340 (former resistance) to come into play.


The SMH retested resistance and is now pulling back on light volume which is constructive. Bullish gap support might be tested.



Th parabolic SAR sell signal for silver ishares triggered yesterday as depicted on the chart above. High volume selling over last two sessions.

The beaten down $USD is forming a tiny base. This could lead to an oversold technical bounce and move back towards the downsloping trendline.

Today's Trades

When I logged into my broker account this morning, there was a bulletin advising of an increase in margin requirements for silver derivatives. This was a good clue that SLV could be under pressure again today.

CTSH was a failed BO yesterday, and today's gap down and breach of support, set up a good shorting opp.

The best part of the CTSH trade was the reversal long after price formed a perfect, low risk handle on the 1 minute chart below.

At the EOD price broke back above resistance. I'll be watching tomorrow to see if CTSH forms a bullish inverse H&S bottom.

ARMH, another failed BO from yesterday, set up a short on break of well defined support. Took a partial at gap support, but eventually it failed. Covered balance as price approached complete gap fill. Not much of a bounce after such a big move.

Technical Picture - Modest Gains on Higher Volume to End the Month

Markets opened somewhat mixed, with the DOW outperforming on the strength of solid earnings from CAT and MRK, whereas the NASDAQ lagged following disappointing reports from RIMM and MSFT. Still, we managed to close positive across the board on higher volume. Leaders included solars, semis, coal, GLD, MOO, airlines and energy. Biotechs saw profit taking after an extended run.

Some of the companies reporting earnings the week of May 2nd-6th: Monday: ACV, AB, CPO, DISH, SATS, JKS, APC, DVA, DNDN, FMC, FST, HOLX, and NETL Tuesday: ANR, ADM, AVP, BZH, BYD, BPI, CLX, CTSH, INCY, LM, MA, PCS, MYL, OSG, CBS, CEPH, CRL, CMCSA, DENN, GNW, KNXA, MAKO, OPEN, VCLK, WWWW, and AUY. Wednesday: ASCA, AOL, CLH, GRMN, HNT, K, GAS, NUS, OIIM, PCG, SLGN, BEBE, CMO, CECO, CLWR, ERTS, GG, GDP, IPI, LEAP, PRU, SMSI, TSLA, and WFMI. Thursday: CVC, CBOE, DTV, RAIL, GM, MINI, MNTA, OWW, PXP, RDN, SHOO, TBL, THS, VNDA, VC, WNR, JOBS, NILE, CQB, DEPO, FLR, HANS, KOG, JCOM, KFT, LLNW, PWER, PCLN, RNWK, V, WBMD, and WMGI. Friday: CAS, DSX, ZEUS, PNM, UPL, WTW, and WCG.

The $USD is in a free fall versus GLD and SLV which are parabolic. We should get a technical oversold bounce in the $USD any day now. This is not likely a bottom because there's no positive divergence to indicate an imminent reversal.


By the same token, GLD is due for an overbought technical correction, similar to what we saw in SLV early last week.


Last week's correction in SLV provides us a preliminary support level.

Coal is breaking out of a tight congestion area.

Day Trades

OXY - HCPG pick - favorable earnings was the catalyst for this high volume extension. I waited for a NRB before jumping in.

DRIV - A narrow range coil triggers the short entry. Came within 5 cents of a stop out, but by EOD, my target was reached.


RIMM was a gap down on earnings warning. After the opening range, price couldn't move beyond the 50% Fib. retracement level and eventually broke the trendline for a low risk short.

I covered half when I saw some real size on the bid side at the $48.50 level.


AMRN printed NR7 on Friday. Watch for price expansion.

Technical Picture - Modest Gains

A slightly weaker open following higher than expected initial claims (429k vs. 390k). We chopped in a narrow range for most of the session, but managed new recovery closing highs by EOD. Next short-term target is 1362.

Stocks in play for tomorrow - RIMM - Q1 earnings warning - big gap down. CAT earnings in pre-market. Since Caterpillar last reported, the stock has gained 17.5% versus the S&P 500, which is 4.8% higher. Also, since CAT last reported, it purchased Bucyrus (previously BUCY).

Biotech/Pharma ETF IBB has been one of the best performing sectors since the March correction as depicted on the chart above.

AMGN rebounded strong this week after last Friday's earnings sell-off. Now ESRX, a pharma related name, is doing the same following earnings weakness on Monday evening.

AMRN another Biotech, set up a sweet dip buy as depicted below. Also setting up a C&H pattern for tomorrow.

Two trades in AMRN. 1. Long bullish rounded bottom; and 2. Re-enter long when price corrects back to its trendline as depicted on 1 min. chart below.