RIMM Finally Breaks Out

RIMM finally broke out of a two month base today. As you can see from the volume on 5 minute chart below, there's momentum behind the move. Adding this one back to the focus list for some follow through.

Technical Picture - Minor Gains

The markets opened on a positive note and quickly broke above resistance on the heels of some favorable earnings reports from NFLX, EBAY, CAT, MCD... However, there was a clear loss of momentum as depicted by the negative divergence of the RSI to higher prices on the 15 minute chart below.

As the $USD found support and started to bounce, equities succumbed to some profit taking into midday and early afternoon. GLD was also very weak and acted as a leading indicator.

In the last two hours, the bulls were able to regain control and pushed prices back up to the unchanged line, plus a smidge, to end the day in the green.



AMZN is a good example of how I use Esignal's RSI price bars to help guide my trades. AMZN was basing at intraday support $164.00 and had printed two NRIBs on the 15 minute timeframe. I took a short position on breach of support as depicted below.

RSI 14 did not confirm lower prices on the breach. In fact there was slight positive divergence on the lower low, so I expected the trade to fail and scratched the trade before it cost me.

About an hour later, AMZN setup again at the base. This time it carved out a perfect handle before breaking and the RSI price bars confirmed right away. I covered the short when I noticed positive divergence to a lower low, and shortly after, entered long. The positive divergence to lower price foreshadows a reversal in trend.

Technical Picture - Markets rally on $USD Weakness

Markets rallied on $USD weakness. The greenback fell back down after testing the downsloping 20 EMA. The S&P had solid gains just shy of recent peak, but the $Comp was lagging.

Stocks gapping up on earnings after hours - NFLX and EBAY. Gapping down XLNX.

Initial claims in pre-market and leading indicators and Phil. Fed at 10:00.

Bearish island reversal in GLD unless it can go back and fill the gap.

TAN, the solar ETF is selling off on high volume.

WYNN and CREE daytrades.

I had hoped CREE could rally back up to first level resistance at $51.00. If we look at the chart below, the H&S top reached full extension on the open. Now, we should be able to get a full gap fill over the coming days.

MYGN is flagging.

If crop futures are limit up again tomorrow, AGU should BO of the base.

If $USD continues lower, commodities will continue to bounce. PCX approaching important baseline.

Darvas box long GOOG. Darvas box short EQIX. Important resistance over head for GOOG. This one needs time.

NFLX - earnings gap. Basing at former failed BO level. Should be interesting to watch how this plays out tomorrow.

Trade Review - CELG, AMGN, FSLR

Sunday's post "Biotechs Poised to Breakout" was a good starting point for Monday's day trading.

CELG took out the PDH in pre-market trade, so I used the PM high as my trigger. The stock ran up in morning trade and consolidated sideways in the afternoon. As long as price holds most of these gains, I'll be looking for further upside.

AMGN was somewhat extended after Friday's big move, so I was looking for some retracement. It carved out a bullish morning star reversal pattern just above the 38% Fib. retracement of Friday's range. Wait for a low risk entry. After a slow start, it worked nicely in the last two hours of the session.

FSLR from the focus list, took out resistance in early trade, retested and held as support for a fast move higher.

BIIB, which I didn't trade today, looks like the best biotech setup going into Tuesday.

Technical Picture - Markets Mixed

Markets were mixed on Friday with tech outperforming the broader markets on the heels of GOOG earnings Thursday night. Several factors weighted on the S&P and the DOW including continued weakness in banks/financials over forclosure issues, bounce in the $USD, weak earnings from bellwether GE, and unfavorable Mich. sentiment data.

As we can see from the 5 day performance chart below, money is flowing out of financials into tech.

The banking/financial sectors are really ugly. If they don't find support soon, it'll kill the rally.

Diverging markets Comp. vs. S&P and DOW is a yellow light and could lead to short-term corrective price action.

Companies reporting earnings this week:

Monday: C, HAL, PETS, AAPL, IBM, STLD, VMW, and ZION.
Tuesday: AEP, BAC, KO, EMC, GS, HOG, ITW, JNJ, LMT, OXY, BTU, SVU, WFT, CREE, ISRG, JNPR, SYK, WDC, and YHOO.
Wednesday: ABT, MO, BA, DAL, GENZ, MS, LCC, USB, WFC, AMR, ETFC, EBAY, NFLX, SCHN, and STX.
Thursday: ALXN, T, BBT, CAT, DHR, LLY, FCX, GR, HSY, JBLU, NTRS, NUE, PENN, PM, PCP, LUV, TRV, UPS, UAL, AMZN, BUCY, COF, CMG, SNDK, and SYNA.
Friday: EXC, HON, KEY, ERIC, SLB, TROW, and VZ.

Focus list for next week includes Thursday's setups for CREE, ALTR, and WYNN still in play. Also, add FSLR and ADBE at the blue lines on the charts below.

ADBE formed a base at these levels in August and could easily retest $30.00 on the MSFT rumor.

Let's review Friday's trades. We said that AMZN would likely break the $157.00 base in sympathy with GOOG earnings. And we also said it would likely gap up.

That's exactly how it played out. Opening gap, followed by a retest of the base. We wait for price to come back into the BB and form a tradable base. I exited after 3 consecutive WRBs.

Price consolidated the early move and there was no evidence that AMZN would retrace so I started looking for a potential second entry. Price formed a flat base. Two pivots into the same price levels is a tradable base. Price rallied and then retested the base before the final sprint into the close.

AAPL had an early run similar to AMZN but I missed it. In the afternoon, I noticed it was coiling near session highs. I took a long entry. Here again, price retested the base before ripping into the close.

Biotechs Poised to Breakout

IBB, the NASDAQ biotech ETF looks poised to breakout of a multi-year base at around $90.00.

The top 10 holding of the IBB account for 46%, the balance is spread over the remaining 118 names.

Here are a few biotech names I like over the short-term:

AMGN, the top holding of the IBB had very bullish action on Friday, and looks poised to BO of its $57.00 base in the coming days. AMGN is scheduled to report earnings on Oct. 21 AH (after hours). I don't recommend holding into earnings unless you have protective option strategy.

BIIB - base around $58.00 looks good. Earnings Oct. 26 PM (pre-market).

CELG, the third largest holding in the IBB, has a very nice handle forming as price contracts at the $59.00 level. CELG is scheduled to report earnings on Oct. 28 PM.

MYGN has already broken out of its base. I'm looking for a shallow pullback to gap support/fill, as a springboard to higher prices. MYGN is scheduled to report earnings on Nov. 2 AH.

TEVA, the second largest holding in the IBB, looks good at $55.00. This setup is an inverse H&S bottom. TEVA reports earnings on Nov 2 PM.

ONXX is setting up at $28.00. ONXX reports earnings on Nov 3 AH.

CEPH is setting up at around $64.00-$64.50. CEPH reports earnings Oct. 28 AH.

Technical Picture - Minor Losses

Minor corrective action on weaker than expected economic data and confusion over foreclosure processes, as depicted on the intraday SPY and QQQQ charts above and below. The SPY retraced 62% of the last leg up and the Q's retraced 38% before bouncing into the close.

After hours, GOOG's big earnings beat ( +$0.96 above consensus) have NQ Emini futures trading slightly above daily resistance. GOOG is up close to $50.00 from its daily closing price.

Tomorrow is OPEX so expect more volatility for option-able stocks. Also, keep an eye on the economic calendar.

Today's Day- Trades:

FSLR was testing its trendline after retracing 50% of the last leg up. It had carved out two NRBs ready to expand. The pre-market price action setup a tradable entry point at $140.00. The targets based on the daily were 20 MA and resistance at the blue line. The trade was executed as depicted below.

CREE had relative strength yesterday in the wake of disappointing earnings by INTC, so it was worth a second look. As you can see from the daily chart below, it was a good candidate for a target trade to the base of resistance at $57.00. I'd like to see it consolidate at this level before breaking out. The next target is a move into bearish gap resistance.

Price penetrated the PDH on the OR and consolidated setting up an easy long.

STI was from the Trade-Ideas scanner and setup a bear flag short on banking sector weakness.

Going forward, I like the following charts:

ALTR has held support of BO point and is testing the trendline. Long above blue line.

WYNN is holding support of $100.00 as it flags. Could be a big move.

AMZN has been basing $157.00 for several sessions and will likely move higher in the aftermath of GOOG's big earnings beat. Hopefully it won't gap too much.

P.S. To Trader-X fans, he's back!