ININ showed up on a scan and I waited until price narrowed on the support of the 10 period MA before going long. Same type of setup as MED yesterday.
Couldn't resist this gap up long on AAPL. Long on a break of the OR high. This is a 5 minute chart. Stopped out at $85.10.
MED was a low risk dummy setup that I found on my Esignal leaders list. It carved out a bullish WRB on the open and then consolidated in an orderly fashion on lower volume until price tagged the rising 10 period EMA. I entered long on a break of the 10th bar high. I was stopped out for a partial profit at $12.99. The specialist took me out on the bid instead of waiting until my stop price hit the ask. I was little annoyed but in the end, I probably saved on slippage. I exited the balance of the trade at the end of the session.
Yesterday's big winner turns out to be today's big frustration. I shorted AAPL on a break of this morning's bear flag pattern on the 15 minute timeframe. The trade went along smoothly until price approached the OR range low and started to reverse. I immediately covered 50% because until the OR is taken out on a closing basis, the trade is vulnerable (my interpretation of Trader-X rules). After price rallied and failed to take out the 20MA, I lowered my stop just pennies above. It may sound odd, but when I finally got stopped on the balance of my position, I felt relieved that the frustration had come to an end. After being stopped out, price rallied and tagged the OR high, pivoted and pulled back in. My next entry was a scalp at $80.60 and I was stopped out at $81.19.
As previously discussed, 2400 was a key technical level and the last two sessions have resulted in a technical bounce. Seasonal factors are in play as well (year-end window dressing). Despite all that, today's gap up will provide a slightly higher level of support. Also note that the RSI has recaptured the 50 level. All major tech sectors participated in today's rally with networking and internet pacing the way.
Here's a completed view of the AAPL trade. I spent a lot of time on this entry and the only thing that kept me hanging in was the volume pattern on the 5 minute timeframe below. The volume was much higher on the early rallies than on the pullbacks. The 15 minute timeframe really didn't look all that compelling and I was hoping that it wouldn't just trade sideways all day as I had invested too much time on it. The trigger was the close of the 6th bar on the OR high. The entry was a break of the sixth bar high. The blue lines represent support and resistance areas. I took a partial profit as price approached $80.00 because on the daily chart, this was a key technical area and secondly because of the round number significance.
The chart below shows the AH trade. The last bar traded over 125,000 shares. And Briefing.com notes the following:
Nice call by Trader Mike on AAPL this morning. The Gap fade setup became obvious to me when the 6th bar closed on the OR high. Long on a break of the 6th bar high. My interpretation of Trader-X rules.
My strategy today was focused on low risk because of the holiday reduced volume. RHT gapped up on earnings and volume was very bullish. Still the gap was so wide, I decided to wait for a consolidation before going long. Patience finally paid off around 1:30 EST when price met up with the rising 10 period MA. Shortly thereafter price broke the narrow channel on an uptick in volume.
NT was another very low risk entry I found in early afternoon. Nortel Networks (NYSE:NT) has had quite a run since its reverse stock split. It showed up on a gapper scan last week and at first I ignored it but I like the volume and I'm adding it to my list of momo stocks.
The NASDAQ is approaching the first test of the 50 MA since crossing over form the other side in August.
Yesterday, I mentioned the importance of catching and holding the 50 MA on the 15 minute timeframe. Today's open was promising, but then we ran into the 200 MA and couldn't move higher. I'm glad I wrapped up my trading during lunch, because the second half of the session was a real snooze. Watch minor support at 2425. A decisive break of support could give us some tradable bearish movement. I'm still looking for a technical bounce at 2400.
MA pulled back to support (blue line) and the rising 10 period EMA in an orderly fashion in early trade. I entered long just as price was approaching $97.00. MA rallied hard from $97 to $99.00 in less than 30 minutes. Once price was firmly above $99.00, I moved my stop to $99.00 to protect my profits. I was stopped out shortly thereafter. My second entry was a low risk dummy entry as price lifted from support of the 10 period EMA following a NRB midday. I was well aware of the negative divergence of the RSI on the 5 minute timeframe and decided to take my profit at $99.00 as I was fully expecting a lower high. That's exactly how it played out and I was happy with my decision. These were my only trades today.
The NASDAQ gapped down on the open on some weak economic data. We spent most of the rest of the day gap filling. The first wave almost filled the gap from yesterday's low and the afternoon wave filled yesterday's closing gap. Once the gap was filled, we came into some weakness into the close. I'm watching the 50 MA on both the daily and 15 minute timeframes. On the shorter timeframe, I need to see price catch and hold the 50 MA in order to assume a bullish stance. If this doesn't happen, then I look to the daily 50 MA as potential for a technical bounce. Crude inventories tomorrow at 10:30 EST.
MA had a technical bounce from a gap fill dating back to Nov. 10-13. The high on Nov. 10th was exactly $90.50, matching the low on today's wide range, opening bar. However, there was no low risk entry so I decided to let it go. I checked back during lunch to observe the consolidation and decided to watch it closely in the afternoon. Around mid-afternoon, a low risk dummy setup presented itself and I jumped in.
I noticed a strong uptick in volume in ENER on a retest of the morning low. I checked Briefing.com for any news and they had just posted some bullish comments from a boutique firm. Usually, Briefing is late posting comments and I was surprised that I was able to catch this one so early. I took a long entry on a break of the doji high. I booked my profit as price approached the upper level of the resistance zone. This is a scalp so I prefer taking profits before they disappear.
The Nasdaq tested resistance in early action but failed. It looks like we've carved out a tweezer top reversal pattern and so I'm expecting some weakness in the short-term. The next major support level is the rising 50 day MA, followed by the April highs at 2375. I'm watching the RSI closely as it approaches the 50 mark. A sustained break of the 50-45 level would signal a downtrend. Notice how the ADX line has come down to 17.5 from a high of 40 over the last month as price consolidated under the current resistance level. The D+ and D- are knotting up, making it difficult to determine if the next momentum phase will be up or down.
From the daily timeframe above, you can see how Friday's NR7 was setting up for price and volume expansion. Friday's bar was sitting just below the converging MAs, so the direction was setting up for a short. However, I mapped out support and resistance on the 15 minute timeframe below and prepared myself for either direction. The first bar was wide range and fell into support on high volume. The next three bars consolidated the WRB but could not bounce, so I decided to short on the fifth bar as it took out the fourth bar low. It was not as smooth as most NR7 trades, but the outcome was profitable and MA closed near its lows.
Looking forward to seeing Robert DeNiro's "the good shepherd" over the holidays. I just saw Matt Damon and Robert DeNiro on Chris Matthews Hardball College Tour and Matt said some things about the current administration that many of us think but few have the guts to voice in public. If you get a chance catch the repeat on MSNBC.
Monday's are always tricky, but today's gap up just didn't have enough volume and it was no surprise when the test of resistance failed. I shorted the Qs as soon as the fourth bar showed continuation with a stop just pennies above the 10:00 high. They easily broke through the first level of support with the usual retest during the midday doldrums, followed by more aggressive selling in the afternoon.
I shorted the Qs on the open because despite bullish retail sales there was nothing compelling enough in the Briefing.com news to push price beyond the intraday pivot point (black arrows on the chart). The entry was low risk because my stop was set just pennies above the pre-market high.
I shorted CAL as soon as the third 5 minute bar took out the low of the second bar. I set my initial stop at $46.50 because I expected CAL to be much more volatile and because there is no real intraday resistance at the opening price level. The trade started out nicely, but shortly thereafter buyers stepped in and I felt I might me stopped out. Trading the open is extremely volatile, however, I had a strong conviction about my short and resisted tightening my stop. I covered 50% of my position when price tagged $45.00 for the second time, and moved my stop to breakeven. I was very happy to cover the balance at $44.25 and be done with this choppy ride.
CAL gapped down on strong volume. The OR was a wide doji like stick. It was followed by a feeble attempt to bounce. The third bar was almost a bearish engulfing type bar. The market was very weak and I decided to short CAL as price took out $44.00 on the third 15 bar. Technically, I should have waited for the third bar to complete itself, but this was more about feel and I knew if I waited, I'd have a hard time getting in. I took a partial profit as price tagged support of last Thursday's high. I was stopped out on the balance about an hour later.
A weak open was quickly reversed and followed by a sharp rally. Unfortunately, by 10:15 EST it was all over and the market settled into a NR snooze fest. Typical fare ahead of a FED policy statement. Tech sectors were mixed but very little was gained or lost. Tomorrow's economic data includes the Trade balance at 8:30 and the FOMC policy at 2:15.
It doesn't get much better than this. CAL gapped up and rallied hard, formed a tweezer top candlestick reversal pattern and pulled back in an orderly fashion (no overlap of candlestick bodies and lower volume on the pullback) to its rising 10 period EMA. Upon tagging the EMA, it formed a small hammer reversal bar. My entry was a break of the high of the hammer. I took a partial profit as price retested the morning highs and sold the balance into the close.
Only one trade today as I had to leave the office at 2:00 EST. We had a weak open, but shortly after 10:00 things turned around. NVEC was a potential NR7 going into the session so I watched it closely. After a shaky open, it managed to hold yesterday's low as support in the early going. By 10:30 it looked well positioned to make a move higher so I took a low risk entry as soon as the 5th bar took out the fourth bar high. NVEC rallied nicely from $38.00 to $39.00 and then began to consolidate. After the ninth bar, I tightened my stop. By accident, I typed in $38.94 instead of $38.84. The stop out would have been inevitable either way. Once the consolidation started to narrow, I re-entered long just above $39.00 and took my exit at 1:30 just above $39.50.
We gapped up on the open and it was downhill from there. The SOX opened with a multi-month high and proceeded to carve out a bearish engulfing bar for the day. All tech sectors were weak ahead of tomorrow's much anticipated jobs data. Trying to determine how the markets will digest jobs data is always tricky. For some interesting insights on this topic check out Yaser Anwar's Investment Ideas
TWLL was another potential NR7 play that I posted this morning. As I mentioned, it is not very liquid and so not for everyone's taste. After a quick lift on the open, it chopped around a bit before heading back up towards resistance. At resistance, it traded sideways for a long time until the rising 10 period EMA caught up. This presented a low risk dummy entry on a break of Monday's high. Lots of slippage on the entry, but it moved very nicely after that. In order to avoid slippage on the exit, I let it go when it appeared to be carving out a lower high.
RIMM was set to crater from two downgrades this morning. Yesterday's NR7 bar hinted that the expansion would be quick. There was no low risk entry off of the OR, so I decided to scale into the position starting with 100 shares on a break of the OR low. This is a pricey stock and errors can be costly, hence the scaling in tactic. When price showed me that it was not going back to test $132, I added another 100 shares and when price took out the second bar low, I added another 100 shares. My target was $130 because round numbers tend to have strong psychological meaning for support and resistance. My original stop was $1.00. By the time price broke $131, I tightened the stop to $132.
Yesterday and today were NR days with lots of fakeouts and failures. I'm cautious about trading just one timeframe under these circumstances, so I'm keeping a wide range view of the 60 minute timeframe as well as the 15 minute on my screen at all times.
MRVL showed up on my gapper scan. A quick look at the daily timeframe showed that yesterday's bar was an NR7 so I went long on a break of resistance on the fourth bar and an uptick in volume. MRVL then stalled as it retested former resistance but managed to hold as support. It progressed in an orderly fashion for the better part of the day. In mid afternoon it attempted to take out the midday resistance but failed and that's when I took my exit.
GES was a low risk dummy entry looking for an extension of yesterday's big move. As you can see from the chart, it gave a good try but in the end it failed and I was stopped out for a tiny profit.
BSX was another gapper from my scan. I was looking for the elusive midday momo move, but it rallied up to the morning high and came right back in. I was anticipating this and I set a tight stop. Good for 17 cents.
AKAM was a low risk short entry. My target was the morning support area and I was happy to cover as soon as I saw that support was going to hold.
Bearish flag alert on SNDK. I'm watching for a high volume break of $44.50.
Just a quick post tonight to highlight a potential spinning top on the NASDAQ. Crude inventories tomorrow at 10:30.
GES was an NR7 setup after two inside days. It opened weak and tested yesterday's low on the OR bar. The second bar was NR, and the third and fourth bars lifted price back up to resistance on increasing volume. My entry was a break of resistance with a stop just below the fourth bar. The NR7 setup worked beautifully - notice the price and volume expansion on the break. I knew this couldn't last for very long so I tightened my stop and was stopped out at $64.75.
Keep this one on your watch list for tomorrow as it is on the cusp of a breakout on the daily timeframe below.
RMBS was another potential NR7 - long off of a hammer reversal, but it failed and I was stopped out for a small profit. 
SNDK was strong gapper on the open and I took a long entry on the first consolidation, but it also failed and I decided to exit before I was stopped out.
