Technical Picture - Consolidation Ahead of Jobs Data

Another narrow range session as participants move to the sidelines while awaiting tomorrow's jobs data. Gold, however, continues to shine, as the high volume momentum play extends.

Jobs data will set the tone for morning trade and then a quiet afternoon as people getaway for the long weekend.

After yesterday's high volume, WRB in gold stocks, I was anticipating follow through, but did not want re-enter before a pullback. By placing fibs from last leg up - point A to B, we can sit back and wait for an ambush trade to develop. GG retraced almost 62% and bounced for the next leg higher. I entered as price crossed above 38% retracement level. Took a partial as price approached 50% extension and was stopped out on balance. Volume today was brisk and from the daily, we see a clear path to the $44-45 level.

I took a partial on my ABX swing EOD just in case we get really favorable jobs data. I doubt that the data will be strong enough to kill the gold trade, but better safe than sorry.

Technical Picture - Flight to Safety

When I heard CNBC say that gold was up 9 pts. in pre-market, I knew that the flight to safety trade was in play following yesterday's sell-off. Gold is a leading indicator and today's high volume breakout signals that investors believe that this market correction, will be deeper than the last.

The S&P, meanwhile, printed another NRB and appears to be forming a H&S top.


All of my gold WL stocks opened strong and rallied all day. AEM gapped up and carved out a C&H pattern in early trade. Took a partial on full measured move of the pattern and held the rest to 200% extension. Traded ABX in the retirement account for a swing trade. As noted above, there was big volume supporting this move, so it's worth hanging in or re-entering when the second base breaks out.


POT - AGU for POT rumor triggered some buying off of the ORL. Managed a couple of quick target trades as POT carves out an inverted H&S bottom. Keep this one on the focus list for tomorrow.

Technical Picture - Distribution Day

Yesterday's NR7 was a perfect foreshadowing of today's expansion. Despite the stellar ISM and pending home sales data, the bears easily took control of the session and held into the close. Financials paced the way lower amid rumors, along with commodities/energy on a stronger $USD.


The tail end of the range bound market was difficult to trade. One strategy that worked well was buying/selling a head fake lower/higher. Using PDH/L as trigger points, look for reversal candlestick patterns shortly after trigger point has been breached - ideally this happens in the first/last hour of the trading session when volatility is highest.

Technical Picture - Narrow Range Chop

After a weak start the markets got a boost from better than anticipated new home sales, however, failed to follow through with much of the session spent in narrow range chop. That leaves us with NR7 (price/volume contraction ) on the daily. Tomorrow's pre-market economic data should set the tone with initial claims, prelim. Q2 GDP and core PCE at 8:30.

As noted earlier in the week, V is carving out a Cup & Handle pattern at $70.00. Yesterday it formed an intraday base at $69.00. Today I decided to place a buy stop order on a break of PDH for a target trade to the C&H base. Price consolidated midway to the target, but held support of R1 (not depicted), eventually reaching the target.



MYGN was my gapper trade. It formed a C&H which broke late in the session, but the extension was really lame. Bullish island reversal on the daily could develop some follow-up trades.

Technical Picture - Bearish Candlesticks

Markets notched new intraday highs on strong economic data, but failed to hold. After failing to retest the early highs, prices retraced back to session lows. This leaves the S&P with two consecutive shooting stars and possibly a tweezer top reversal pattern.

Keep an eye on economic data tomorrow - durables in pre-market, followed by new home sales at 10:00 EST and crude inventories at 10:30.



If you have POT on your focus list, we lucked out again today with a bearish h pattern. Quite similar to Jim's CME bearish flag yesterday, except the consolidation has more of a curve. Price penetrated support from 3 PDLs (red line segments) and tried to save itself through a lengthy period of price/volume contraction. But the bears were victorious on the expansion. Once support gives way, all the preset stops trigger resulting in a fast move to the next support level.

Technical Picture - Weak Close

Markets extended in early trade. The pullback after the early session move to new multi-month highs reflects weakening momentum with the long upper tail creating a weak candlestick. However, weak stick patterns have been seen several times over the last month or so with no follow through pressure. Watch for consumer confidence data at 10:00.


Initially, it was hard to know which direction POT's narrow price contraction would break. I was prepared to take the trade either way, but since this is one of my weaker WL candidates, I was satisfied with the break lower for a gap fill.

Summer Time - Basic Multi-TF Patterns

In slower summer time trading, I often find it helpful to look at a longer period intraday chart. It can cleanup some of the noise and reminds me to be more patient for a good setup. I found this setup today on a 30min chart (left chart). The daily chart (lower right) is extremely weak compared to the broad market and has a very interesting pattern on a longer term daily or weekly chart. After the weak OR, the intraday volume contraction was confirming the bear flag and is visible on the 30min and 15min (upper right) timeframes. Range contraction (NR7/NRIB) followed by a hanging man marked the end of the bear flag pattern.