NASDAQ Technical Picture - Close Above 2600

The NASDAQ gapped up and traded in a fairly narrow range on higher volume probably due to some month-end window dressing. Tomorrow we have an abundance of economic data which will be a key driver to the trading session. However, just a feeling and feelings need to be confirmed, but today's session felt choppy and shaky. The daily chart looks like it might be setting up for a bearish island reversal ( AAPL chart as well).

Economic Calendar: Nonfarm payrolls, Unemployment rate, Hourly wages, Avg. work week, Personal income/spending, and Core PCE inflation at 8:30; ISM index and Michigan Sentiment at 10:00.

After Hours Summary: DELL up 5.5% on earnings/outlook

Companies moving in after hours trading in reaction to earnings: Trading Up: DELL +5.5%; JCG +4.3%; PLL +2.4%; WIND +1.3%; HRS +1.2%; ESL +1.1%; OVTI +1.1%... Trading Down: AFCE -6.0%; GAIN -3.2%; NCS -2.2%; ATVI -1.4%; BRCD -1.2%; HOV -1.0%...

Companies moving in reaction to news: Trading Up: ANTP +32.4% (products corporation awarded contract); ISTA +13.1% (announces positive preliminary results from ecabet sodium phase IIb study); DXCM +6.0% (receives FDA approval for its 7-day STS Continuous Glucose Monitoring System)... Trading Down: DDSS -44.5% (receives second approvable letter from FDA for once-daily Tramadol); CRAI -16.8% (prelim Q2 revs below consensus, and EPS below consensus; co lowers FY07 guidance); BLUD -8.3% (sees FY08 $0.92-0.96 vs $1.03 Reuters consensus; sees revs $249-257 mln vs $259.98 mln Reuters consensus; CFO to resign for family reasons); WRE -1.6% (announces public offering of 1.6 mln common shares); FRX -1.4% (Topline results of Phase III study in acute ischemic stroke do not demonstrate difference between Desmoteplase and placebo); CTRN -1.3% (announces offering by stockholders of approx 2 mln shares).

Dummy Trade of the Day - Ciena Corporation (Public, NASDAQ:CIEN)

CIEN gapped up on strong earnings and challenged its weekly pivot high (blue line) in the OR, but failed to close above it. Price pulled back just above the 32% Fibonacci retracement level and then started to move up again slowly. The 11th stick was NR7 and was sitting on support of the rising 5 period EMA. I decided to scale in as price took out the high of NR7, knowing that the PP resistance could be problematic. Three bars later it was challenged and failed again so I moved my stop to break even. About an hour later, yet another attempt failed. At this point I was getting frustrated. However, I talked myself into holding on because each bar was now hugging the PP. In the last hour price finally closed above the PP and the ORH. Although the trade did not extend to the target 38%, and I did not add to my position on the break of the ORH as I normally would, it did generate a 1 pt. gain. Oddly enough it was satisfying because having missed the first hour and half of the session due to personal business, my expectations for the session were low.

CAL gapped up and tagged its daily pivot high in the OR. After testing the PP for a full hour, price retraced 50% before making a second attempt to break out. After closing above the PP, it carved out a red hanging man. I shorted CAL on confirmation of the hanging man as price fell back below the PP.

Normally, I like to see some basing at resistance before price breaks out. Here CAL, made a vertical move from the 50% retracement level back up to the PP. This type of breakout often results in a failure because the stock is exhausted by the time it reaches the key technical level.

After Hours Summary

Companies moving in after hours trading in reaction to earnings: Trading Up: SMTC +10.4%; PSS +6.7%; CHS +5.0%; JRJC +4.4%; NOVL +2.6%... Trading Down: OPTM -9.2%; LGF -8.5%; JAS -2.6%... Companies moving in reaction to news: Trading Up: ENCY +26.7% (Canadian Health authority approves THELIN (Sitaxsentan Sodium) for pulmonary arterial hypertension); OCCX +7.9% (TLCV announced that it has entered into an agreement to sell all of its shares of OCCX common stock to private equity group); CEN +4.1% (enters into merger agreement with Thomas H. Lee Partners and Fidelity National Financial; Ceridian shareholders to receive $36.00 per share); ADPT +1.5% (Steel Partners II deivers letter to Adaptec stating concerns over co direction); EMKR +1.1% (Kopp Investment Advisors discloses 6.4% stake in SC 13D filing)... Trading Down: TAM -2.9% (CAIXA and TAM launch partnership); VCLK -2.4% (says Tom Vadnais appointed Chief Executive Officer, succeeding James Zarley); LYO -1.4% (to sell $510 mln of 6.875% senior unsecured notes); CSC -1.0% (announces delay in filing 2007 Form 10-K).

Courtesy of Briefing.com

N.B. - By exception, there will be no pre-market post tomorrow morning.

NASDAQ Technical Picture - Another Multi-Yr Closing High

We can't complain about a lack of volatility on a day like today. First the gap down on Chinese stock market worries and then the FOMC minutes in the afternoon propelling the NASDAQ to a multi-year closing high. Volume was up but still below average.

Economic calendar: Prel. GDP and Chain Deflator, Initial Claims at 8:30; Chicago PMI at 9:45; and Construction spending at 10:00

Dummy Trade of the Day - True Religion Apparel, Inc. (Public, NASDAQ:TRLG)

TRLG gapped up on the open and carved out a hammer with a long lower shadow. Price ascended towards its daily pivot high from May 23rd and consolidated just below it. The 6th 15 minute bar was NR7 (price and volume contraction). I took a low risk, dummy long entry on the next bar as it broke above the PP. Because the gap was small, I extended my Fibonacci lines from yesterday's low to the pivot point (blue line). I took a partial as price reversed after tagging the 75% extension and I closed my position ahead of the FOMC minutes.

Pre-Market - Wednesday May 30th

Gapping down on weak earnings/guidance: SOLF -20.5%, IBKR -5.5%, BGP -5.6%, JOYG -4.4%, FRO -3.0%... China-related stocks gapping down after 6.8% overnight sell-off in China: SNDA -5.1%, CAF -4.6%, KONG -4.4%, TSL -4.3%, XFML -4.0%, SOHU -3.9%, EFUT -3.8%, FFHL -3.7%, FMCN -3.6%, GCH -3.4%, SINA -2.2%, BIDU -1.7%, CTRP -1.3%... Chinese solar stocks under pressure on combination of weakness in China and in sympathy with SOLF earnings: JASO -5.9%, CSUN -5.0%, CSIQ -4.7%... Other news: IOMI -8.6% (continued pressure), TINY -6.0% (still checking), DEEP -3.6% (initiated with a Neutral at JP Morgan).

Futures indicate a lower start for the mkt as China's Shanghai Composite sold off 6.5% following yesterday afternoon's report that the Chinese govt tripled the tax on stock trading to 0.3% in an effort to curb speculative buying activity in the mkt. Note the monthly ADP employment report showed that an estimated 97K new private jobs, or roughly 123K nonfarm jobs, were created in May. However, the ADP report lacks credibility compared to Friday's more closely-watched May nonfarm payrolls, which is expected to check in around 135K.

Notable pre-market Calls include Upgrades: KNXA at Credit Suisse; Downgrades: BWLD at RBC; Initiations: STLD at Citi (Buy)... On the Earnings calendar: CHS, JRJC, JAS, LGF, NOVL, OPTM, PSS, SMTC and TIVO are confirmed to report after the close... On the Economic calendar, the May 9 FOMC Minutes will be released at 14:00ET.

Gapping up on strong earnings/guidance: CWTR +12.0%, DBRN +4.5%, PVH +3.0%... M&A: CDWC +3.5% (confirms it will be acquired by Madison Dearborn Partners for $87.75/share... Other news: OPWV +4.2% (Unstrung discusses ongoing rumors of higher bid in Openwave), BIIB +3.6% (announces $3 bln share repurchase through a modified "Dutch Auction" tender offer), TASR +2.5% (announces two orders).

Courtesy of Briefing.com

NASDAQ Technical Picture - Choppy, Low Volume Post Holiday Trade

I don't want to over analyse today's choppy, low volume, post-holiday session as I suspect many traders/investors took an extended weekend. I'm looking at the intraday triangle on the 15 minute time frame to see if it breaks to the upside or downside.

Economic Calendar: Crude inventories at 10:30; FOMC Minutes from May 9th at 2:00.

Trading up in AH (After Hours) : CWTR (earnings), OPWV, BCSI, CDWC

Dummy Trade of the Day - Dollar Tree Stores, Inc. (Public, NASDAQ:DLTR)

A choppy session with a fair share of failures. The first chart is the 15 minute timeframe and the second is the 5 minute.

DLTR gapped up following Friday's NRB and presented a low risk entry on a break of the second bar high. As with many setups today, there was a caveat, the first bar's long upper shadow. I took the trade anyway knowing that last week's pivot point high would most likely be challenged and that the risk:reward ratio fit my rules.

Although choppy at first, DLTR set up a nice base and break pattern as it tested last week's pivot point. This made me more hopeful that the challenge would succeed. However, shortly after the breakout, DLTR came back in sharply. This did not feel like a retest of the breakout point. On the 15 minute timeframe it carved out an ominous looking hanging man, so I took my exit as the profit on this trade was limited to begin with.

Dummy Trade of the Day - Verigy Ltd. (Public, NASDAQ:VRGY)

VRGY gapped up on strong volume. Initially it retraced below the daily pivot high, but quickly recaptured and closed above it. The second bar was gravestone doji type bar which did not inspire confidence. As the chart developed, I decided to use the 30 minute ORH as my base because it was a lot cleaner and made the chart easier to read. By mid to late morning, the stock had worked off the initial negativity and began to consolidate in a NR on declining volume. As price and the rising 5 period EMA collided, VRGY carved out a NR7 bar, following which price expanded and my buy stop order was hit.

The reason I decided to stick with VRGY despite the gravestone doji, was that there was no resistance. Once the ORH was taken out, price ascended into virgin, blue sky territory.

My Dummy Trading Rules for Base Breakout Gappers:

1. Very high relative volume;
2. Maximum Fibonacci retracement of ORH to previous day low = 38%;
3. Minimum risk:reward ratio for target 38% Fibonacci extension = 1:3;
4. Proximity between price and 5 period ema at base breakout point;
5. Length of consolidation vs. size of gap, ie. the wider the gap, the longer the relative consolidation period;
6. Volume contraction prior to breakout.

NASDAQ Technical Picture - Weekly Update

As expected, Friday's action was narrow range on much lower, pre-holiday volume. Nonetheless, we did manage to recapture the trendline on the opening gap up. The remainder of the day was contained within two intraday pivot points. It was a stock pickers trading environment as most stocks just chopped around in snooze fest range.


The weekly timeframe is still relatively bullish as we continue to consolidate in a tight range on declining volume. Thus, the three hammer/hanging men candlesticks were not resolved yet again as we only managed to add to the unknown by carving out an ambiguous, red doji stick.

As you can see from the McClellan oscillator below, despite heavy selling midweek, we are in the neutral zone with respect to oversold/overbought market bias.

Charts courtesy of stockcharts.com

Pre-Market - Friday May 25th

Gapping down on news: SLFI -35.7% (co reports its investigation has revealed evidence of a sophisticated loan scheme), WAVX -12.0% (to sell 7.3 mln shares of stock at $2.05 per share), NDAQ -5.8% (to buy Nordic exchange O.M.X.), TRB -2.1% (announces preliminary results of tender offer), AMGN -1.0% (EU health panel adopted a negative opinion for Vectibix).

Futures indicate a higher open for the mkt as yesterday's pullback seems to be viewed as a buying opportunity. M&A activity is once again contributing to the positive tone as KO agreed to buy Glaceau for $4.1 bln, while NDAQ said it would pay $3.7 bln for the Nordic exchange OMX. Note there were no market-moving earnings releases or economic data out this morning.

Notable pre-market Calls: NYX is trading up ~2%, Goldman upgrade to Neutral is being cited; HPQ initiated with an Outperform at Friedman Billings... Nothing remains on the Earnings calendar for today... On the Economic calendar, as mentioned above Apr Existing Home Sales (consensus 6.13 mln) will be released at 10:00ET.

Gapping up on strong earnings/guidance: VRGY +11.8%, LNUX +11.3%, RRGB +9.9%, ARUN +8.2%, VIP +3.3%... Other: CUP +18.0% (entered into an exclusivity agreement with a third party regarding a potential transaction), IDMI +14.0% (initiated with a Buy & $11 tgt at Canort Fitzgerald), LMRA +7.6%, BIVN +7.5% (highlighted in BusinessWeek's Inside Wall Street), RFMD +4.7% (upgraded to Buy at Jefferies), DCX +3.5%, CCE +3.3% (KO to buy Glaceau for $4.2 bln, CCE manufactures/distributes KO beverages), BOBJ (WestLB raises BOBJ to Buy), KO +1.4% (co to buy Glaceau for $4.2 bln).

Courtesy of Briefing.com

NASDAQ Technical Picture - Overdue Correction

Charts courtesy of stockcharts.com

Today's WR, higher volume profit taking and negative divergence hint that this correction could go beyond the usual 2-3 day pullback. I'm watching the 2525 level with interest on this third retest of support.

Companies moving in after hours trading in reaction to earnings: Trading Up: VRGY +11.2%; RRGB +6.3%; LNUX +5.9%; ARUN +5.7%; HRAY +2.9%; MENT +2.2%; ARO +1.9%; CTRN +1.7%... Trading Down: PRLS -13.2%; DITC -7.4%; HIBB -2.7%... Companies moving in reaction to news: Trading Up: CUP +22.7% (enters into exclusivity agreement); NHHC +17.7% (acts to pursue superior offer); MDII +7.5% (products chosen for implementation at two U.S. Marine Corps bases); LNUX +5.9% (Announces Name Change to SourceForge, Inc.); IVC +1.1% (discloses in 8-K it recently became aware of a potential embezzlement at one of its foreign facilities; situation under investigation)... Trading Down: SLFI -2.0% (discloses in 8-K that investigation has revealed evidence of a sophisticated loan scheme, orchestrated by certain EFI officers); RMIX -1.3% (appoints Michael Harlan President and Chief Executive Officer).

Economic calendar: Existing Home Sales at 10:00

Trade of the Day - Hansen Natural Corp. (Public, NASDAQ:HANS)

HANS opened fairly flat and tried to move higher, carving out a long upper shadow and some dojis. The narrow red bar at the cusp of yesterday afternoon's consolidation zone, presented a low risk shorting opportunity. HANS easily took out support on the next bar, closing below its 50 MA which subsequently held as resistance. I took a partial as price approached the 200 MA and covered the balance as price came into its $39.00 PP.

AMZN was a short on a trend line break on the 5 minute timeframe. I covered my short when it carved out a tweezer bottom reversal on the 11:30 bar. I also went long but had to scratch the trade. Shortly after that AMZN made a higher low while the market continued lower. I went long again hoping for a retracement back to the morning swing high. I took a partial at the 38% Fibonacci retracement from yesterday's high to the morning low. Unfortunately, AMZN reversed after tagging the 38% level and I spent most of the rest of the afternoon waiting to be stopped out. My stop held by a penny and I closed my position on a small rally end of day. The 38% retracement level lines up with the ORH and maybe that is why it was more significant than I anticipated. I was surprised to see how quickly the stock reversed after the 38% tag.

Trader-X Interviews

Trader-X, the man who owns the gapper trade, shares his thoughts on trading in two engaging interviews. Not to be missed. Check out TraderInterviews.com and WallSt.net

NASDAQ Technical Picture - Market Sells Off on Greenspan Comments

Charts courtesy of stockcharts.com

The NASDAQ was testing its morning swing highs when Greenspan's comments regarding an unsustainable Chinese market boom put a cloud over the markets. Volume picked up as selling began and the market closed on its lows, carving out a bearish engulfing bar and a distribution day. Expect more profit taking tomorrow ahead of the long weekend as Greenspan's comments normally have a lasting effect.

Economic Calendar: Durable orders amd Initial Claims at 8:30 and New Home sales at 10:00.

Companies moving in after hours trading in reaction to earnings: Trading Up: GYMB +7.9%; OVEN +5.1%; ANF +1.6%... Trading Down: NTAP -20.5%; CA -6.2%; ANST -5.0%; LTD -4.0%; FL -3.3%; ZL -1.9%... Companies moving in reaction to news: Trading Up: PZZI +23.0% (announces stock repurchase plan; may repurchase up to 10% of the currently outstanding common stock, which is equivalent to 1,016,000 shares); TRMM +3.8% (reports receipt of noncompliance notice from Nasdaq); CPKI +2.8% (announces Three-for-Two stock split); KBR +2.7% (selected to manage Panama City airport project); RCCC +1.9% (announces a $115.5 mln sr notes offering); CAG +1.3% (expects Fiscal 2007 EPS to be higher than expected); PLNR +1.2% (acquires Runco International)...

Trading Down: ALTH -6.2% (files shelf registration statement); GM -1.9% (files convertible securities offering and obtains commitment for a secured revolving line of credit); NCS -1.4% (lowers Q2 EPS below consensus).

Base and Break Trade - Dollar Tree Stores, Inc. (Public, NASDAQ:DLTR)

I use stockcharts.com to run end of day scans looking for strong base and break candidates. Last night I had three candidates - ATHR, GILD and DLTR. DLTR had the best chart with a NR7 bar yesterday hinting that price expansion was imminent.

The nice thing about DLTR was that it spent most of yesterday afternoon, basing in a NR at the base. So this morning I used a low risk, buy stop order on the open. As you can see from the chart, the trade required little attention other than moving my stop.

AMZN was a base & break on the 1 minute timeframe. I had a target of $71.25 and I folded when price fell back under that level, I know I missed a nice momo move of AMZN both long and short, but I loath to pick a top on a stock that's running a short squeeze.

End of day we a gravestone doji on the AMZN daily timeframe so I will be trading it again shortly.

Dummy Trade of the Day - Fremont General Corporation (Public, NYSE:FMT)

FMT was gift. I accidently started reviewing my Esignal leaders lists before they had been updated with today's leaders. So I was looking at yesterday's leaders just as FMT started taking out yesterday's ORH. I waited until the second bar closed above yesterday's ORH and when the third bar took out the high of the second bar, I entered long. Everything about this entry was perfect except volume which was a little sluggish on the first two bars. As you can see volume came in nicely after the 2nd bar and propelled price in a very orderly fashion.

My second dummy trade, MMR, came from today's gapper scan and was also mentioned in the Briefing.com gapper list. Normally, this setup works very nicely. DSL had a similar setup yesterday. I started scaling in before the break of the ORH and added to my position on the actual break. I knew we had resistance on the daily timeframe at $15.53. Price reached $15.60 and started to consolidate. It dipped back under the pivot point and felt very weak so I closed my position with a small profit.

Pre-Market - Wednesday May 23rd

Futures indicate a higher open for the mkt as investors sift through more M&A news. AL is recommending shareholders reject AA's $27.6 bln hostile takeover bid, but hasn't ruled out the possibility of making its own bid for AA, and is reportedly in merger talks with BHP. Also, CEI agreed to be acquired by MS for $22.80/sh, while PSS said it will pay $20.50/sh for SRR. On the earnings front, MDT and TGT are both trading higher after posting better than expected earnings.

Notable pre-market Calls include Upgrades: CYPB at CIBC, MDT at Piper Jaffray, AEM, AU and RGLD at HSBC; Downgrades: AMD at Matrix, VCLK at Credit Suisse... On the Earnings calendar, 16 cos are confirmed to report after the close, though none are expected to be market-moving releases...

Gapping down on weak earnings/guidance: ADI -8.5%, DDS -3.1%, GME -1.7%... Other news: NFLD -44.5% (reports results of its pivotal Phase III trauma trial with PolyHeme), ISIL -4.2% (downgraded at Credit Suisse), LLTC -2.3% (ITC Judge Rules in favor of AATI in patent infringement case, downgraded at Credit Suisse), NWEC -1.8% I(Bloomberg.com reports that Babcock Infrastructure may appeal NorthWestern ruling).

Gapping up on strong earnings/guidance: SNDA +5.3%, MDT +4.6%... M&A: SRR +32.3% (to be acquired by PSS for $20.50 per share), CEI +4.8% (to be acquired by Morgan Stanley Real Estate for $22.80 per share), AL +3.5% (AL board recommends that shareholders reject AA offer, says co is in talks with other companies)... Other news: CYPB +104.7% (co and FRX announced positive Phase III data for milnacipran), AATI +18.0% (announces ITC ruling in favor of co in LLTC case), ZVUE +9.3% (begins offering free streaming content from Canadian Broadcasting), FRX +9.3% (announced positive Phase III data for milnacipran), MMR +7.9% (announces it will move forward aggressively at Mt. Kare), ONT +7.0% (named as a ADBE takeout tgt by FT's Mergermarket), ZOLT +3.7% (reports new expanded carbon fiber supply agreement with Vestas Wind Systems), ALU +3.5% (follow through on strength overseas on positive outlook), WFR +3.2% (to replace KMI in S&P 500), GOOG +1.5% (unveils its new service Google Hot Trends, which can track search queries; we're still checking around).

Courtesy of Briefing.com

NASDAQ Technical Picture - Choppy Extension

NASDAQ charts courtesy of stockcharts.com

Despite another new multi-year closing high for the NASDAQ, the first half of the session was choppy and very narrow range. The session lacked a catalyst beyond an extension of yesterday's momentum. I'd like to see a pullback to the intraday trendline before we attempt to extend further on basically no news.

Economic calendar: Crude inventories at 10:30

Companies moving in after hours trading in reaction to earnings: Trading Up: BRS +8.2%; MW +5.2%; DY +3.7%; MDT +3.3%; SNDA +3.1%... Trading Down: GIGA -12.41%; ADI -5.7%; EXM -3.8%; PHHM -1.0%... Companies moving in reaction to news: Trading Up: SRR +29.8% (Payless ShoeSource to acquire the Stride Rite Corporation for $20.50 per share in cash); AATI +16.1% (announced ITC judge rules in favor of AnalogicTech in patent infringement case); PTN +9.1% (and King Pharmaceuticals report data showing improvements in sexual relationship and self-esteem in patients); FRX +8.2% (Forest Labs and Cypress Bioscience announce positive results of phase III study for milnacipran as a treatment for fibromyalgia syndrome); ZOLT +3.4% (reports new expanded carbon fiber supply agreement with Vestas Wind Systems); AL +2.9% (board recommends that shareholders reject AA offer); WYE +2.5% (announces new long-term data analyses for Bifeprunox show favorable effects vs. placebo in stabilized patients with schizophrenia)... Trading Down: ARQL -4.2% (files S-3 filing to file up to $100 mln in a mixed shelf offering); FORG -2.2% (comments on patent trial results); MCBI -1.5% (announces receipt of non-compliance letter from NASDAQ); TRMM -1.2% (appoints Richard Stern as Chief Executive Officer); SLFI -1.1% (receives Nasdaq staff determination letter - Sterling to appeal).

AL is gapping up AH on news that shareholders have rejected the Alcoa offer. On the daily chart above we had a nice base and break pattern setting up. As you can see from the 60 minue timeframe below, the base has been taken out AH. Could be a good gapper trade for tomorrow.

Trade of the Day - Valero Energy Corporation (Public, NYSE:VLO)

When VLO tried to challenge its morning high, it failed and carved out a doji reversal bar with a long upper shadow. I shorted VLO as price fell below the low of the doji stick. I placed my stop 5 cents above the star prior to the doji because the doji was too wide. I took a partial when my preliminary pivot point target was met. The next target is gap support and I suspect it will reach that target tomorrow. It should bounce either at gap open or gap close. At the moment gap close lines up with the 200 MA.

Pre-Market - Tuesday May 22nd

Gapping down on weak earnings/guidance: KONG -16.2%, GSOL -7.1%, GIGM -5.5%, APOL -4.1%, SPLS -3.2%, NTES -2.4%... Other news: OMTR -7.1% (announces a 6.8 mln share common stock offering), ACW -6.3% (files for a 5.4 mln share common stock secondary offering by selling shareholders), HRAY -4.9%, ONT -3.5% (announces acquisition of Hantro Products), DYN -3.8% (Chevron to sell Dynegy shares), MNST -2.9% (tier-1 firm suggesting sale of co may be less likely), SSL -2.7% (gives project update for Oryx gas-to-liquids venture).

Gapping up on strong earnings/guidance: PSUN +6.5%, ASEI +4.4%... Casino stocks seeing strength following Tracinda/MGM negotiations: MGM +24.1%, BYD +7.0%, WYNN +4.9%, LVS +3.9%... Mortgage-related stocks moving following FMT developments: FMT +50.6%, NFI +9.9%, LEND +9.4%, IMH +6.6%, AHM +3.9%... Other news: AVNC +20.9% (announces FDA acceptance of Amoxicillin Pulsys NDA), OXPS +6.7% (continued momentum following yesterday's 7% move higher on takeover rumors), EMU +4.9% (light volume, broker comments out of Canada discussed potential sale of co), TSS +4.5% (mentioned by Cramer next co that could be bought), DNDN +4.5% (continuation of strength from yesterday afternoon), STM +2.5% (STM, INTC and Francisco Partners to create a new independent semiconductor co), CTSH +1.8% (positive comments from tier-1 firm).

Short-term Overbought/Oversold candidates -Update- -Technical-

Here's a brief list of stocks that are currently trading at unusually high or low short-term levels. Stocks that are overbought include: JRCC, CFUL, CLRK, RAVN, ICPR, MEK, TBSI, BG, GLDD, TECUA, UA, VCP, CMRG, DDS, RIG, CTRP, OMTR, FRG, OMNI, NM, URZ, ENT, CERS, TOPT, BIVN, PCLN, CRZO, SIL, & WINN. Stocks that are oversold include: IMCL, POP, BBI, MPEL, SOLF, VGZ, GLBC, & IDMI. Watch these stocks for potential continuations or corrections from their current states.

Stocks that closed near or at their session high/lows yesterday on above avg volume -Update- -Technical-

Stocks that closed near or at session highs included: ITW, SBH, EFD, PXP, WYE, SRP, TNE, MVL, VCP, LEG, AMZN, CREE, DJO, CMRG, NRMX, ICE, NYX, TMX, ICGE, LAVA, ALJ, ARA, ACW, AMLN, FEIC, SEPR, & HMIN. Stocks that closed near or at session lows included: SKS, SSL, NVS, & GSK. Watch these stocks for potential corrections or continuations of yesterday's action.

Courtesy of Briefing.com

Dummy Trade of the Day - Amazon.com, Inc. (Public, NASDAQ:AMZN)

The first chart is the daily timeframe of AMZN. As you can see after gapping up and running up on earnings last month, AMZN has been in a basing pattern for almost a month. Friday's bar was NR on low volume. The rising 10 day EMA was supporting price and I was watching it on the open as I anticipated a break.

The second chart is the 15 minute timeframe which highlights the base and break pattern at the ORH. I took a partial as price weakened just above the 38% Fibonacci extension and tightened the stop to the 25% extension. Once price had taken out the 62% extension it really started to accelerate on high volume. The euphoric volume spike foreshadowed the end of the move so I tightened my stop and was taken out at $68.20.

The last chart is the 1 minute timeframe, which shows how I scaled into my position. First on a base break at $64.50 and again at $65.00.

Another Good Day for the NAZ

I had two nice trades with AMZN and THE as discussed in the comments today and over the weekend. I'll post the charts later this evening. It's a really nice day here and a holiday in Canada (Victoria Day) so I want to get out and enjoy the rest of the afternoon.

Pre-Market - Monday May 21

Gapping down on weak earnings/guidance: TSL -3.1% (down in sympathy ESLR -2.6%, SOLF -1.1%, JASO -0.6%, FSLR -0.6%), LOW -2.1%... Other news: XFML -12.5% (announced immediate resignation of Shelly Singhal from the Boards of both Xinha Finance and Xinhua Finance Media, as well as from all executive and managerial positions), HTZ -5.1% (files for 45 mln share offering by selling shareholders), HOLX -3.8% (to acquire Cytyc), SEPR -3.5% (C.M.S. updates Medicare billing codes, Xopenex U.D.V. and generic albuterol to be listed under same codes - tgt cut to $40 at FBR; also upgraded to Neutral at Cowen), DJ -3.5% (Murdoch, News Corp prepare to abandon DJ bid, Pali says - Bloomberg.com), SIGM -3.2% (announces CFO resignation, names Thomas Gay as replacement), MNST -2.6% (Don't believe recent deals should be extrapolated to MNST - Wachovia).


Futures indicate a mixed open for the mkt as investors digest another round of Monday-morning M&A activity. AT has agreed to be taken private for $27.5 bln, a 10% premium to Friday's close. HOLX agreed to buy CYTC for $6.2 bln in cash and stock, while EAGL received a revised $1.95 bln takeover bid from CEVA Group. In addition, China is reportedly investing $3 bln in Blackstone, which increased the size of its IPO to $4.75 bln.

Notable pre-market Calls include Upgrades: HOLX at BofA, SHFL at Bear Stearns; Downgrades: CFC at Friedman Billings, CCU at Bear Stearns... On the Earnings calendar: ASEI, APOL, HMIN, KONG, NTES, PSUN, PERY, NCTY and WSTL are confirmed to report after the close... Today's Economic calendar is clear.

Gapping up on strong earnings/guidance: PEGA +5.8%, CCC +3.7%, RTLX +3.5%... M&A: CYTC +30.4% (to be acquired by Hologic in a stock/cash deal), PONR +17.0% (to be acquired by Olin for $35.00/share), VMED +9.3% (private equity considering $15 bln bid for Virgin Media - The Observer), EMU +6.4% (announces it is in exclusive negotiations regarding potential sale of co... sympathy plays: USU, DNN, URZ, FRG, USEG, CXZ), ATLS +6.3% (to acquire DTE's +0.6% Gas & Oil unit for $1.225 bln), AT +5.5% (to be acquired by TPG Capital & GS Capital for $71.50/share), EAGL +3.3% (CEVA Logistics confirms increased proposal to acquire EAGL for $47.50/share in cash)... Other news: LUNA +40.0% (blood circuit monitor receives FDA clearance), ELN +14.2% (co and Wyeth to initiate Phase 3 trial of Bapineuzumab in Alzheimer's), ARTX +12.8% (awarded $9 mln order by U.S. Marine Corps; very light volume), VC +11.6% (Tatas in talks for stake in Visteon - Business Standard), NCTY +11.5% (announces equity investment and licensing agreement by Electronic Arts), CTEL +8.2% (follow-through momentum after Friday's earnings-related range breakout), CBLI +7.9% (announces Protectan CBLB612 produces breakthrough in bone marrow stem cell transplant study; very light volume), DWA +7.6% (Shrek 3 has highest grossing animated film opening of all time; very light volume), DNDN +6.9% (announces presentation of Provenge data at American Urological Association meeting), OMR +6.4% (momentum extension after stock rallied to highs into Friday's close), VCLK +5.5% (target raised to $43 at ThinkEquity), CRUS +5.3% (Insider buying reported at CRUS - Barron's), CRM +4.5% (Google and CRM weigh alliance to battle Microsoft - WSJ), SHFL +3.3% (upgraded to Peer Perform at Bear Stearns), ONT +3.3% (momentum).

Courtesy of Briefing.com

NASDAQ Technical Picture - Weekly Update

Charts courtesy of stockcharts.com

The NASDAQ ended the week on a bullish note but is down four points overall. Last week we noted two hammers/hanging men on the weekly timeframe and now we have three. We are currently in consolidation phase, despite continued bullish strength in the DOW and S&P. The intraday timeframe shows a clear lack of momentum on the upswing. On the daily timeframe, the ADX line is approaching 10, a level it has not seen since March 2005, leading into the May' 05 correction. The SOX is retesting its breakout point for the second time and my guess is that it will fail. The rally appears to be drawing final breath, however, it could remain like this for weeks, before the actual correction takes hold.

New Rules

Due to a recent onslaught of malicious comments, I have no choice but to turn the comment moderation feature on. These types of comments get my back up and I have responded to some of them in a condescending manner. I don't want the comments section of this blog to turn into a shit slinging contest. That's not what I'm about. So, going forward, persistent malicious comments from anonymous commenters who don't have the courage to identify themselves, will no longer be tolerated. That's not to say that I don't welcome critiques and different points of view. I certainly do, and long-time readers know that I diligently answer all questions.

I noticed that many of my fellow bloggers, most recently Trader-X and ADD Trader have also been the target of these bugs. Maybe the nuts all escaped from the same asylum, or maybe its the change of seasons. Not sure, but these things seem to come in waves every few months or so.

Dummy Trade of the Day - Focus Media Holding Limited (ADR) (Public, NASDAQ:FMCN)

FMCN was an earnings gap which retraced 38% of the move from yesterday's low to the ORH then consolidated sideways for over an hour until the 5 period EMA caught up to price. At first this setup did not seem all that compelling because the consolidation candles had upper shadows. However, I placed a buy stop order above the highest shadow and when price broke and held above the shadow on a closing basis, I had confidence in my decision. Although price did not reach the 38% Fibonacci extension, it did generate a +1 pt. profit.

Gapping Down

Better late than never:

Gapping down on weak earnings/guidance: HURC -14.0%, DEEP -4.5%, ADSK -2.9% (also downgraded to Neutral at Amtech)... Cramer cautious on solar stocks: CSUN -4.6%, JASO -3.2%, SOLF -2.8%, FSLR -2.4%... Weakness in tanker stocks (still checking for reason): GNK -5.0%, DSX -4.1%, EGLE 4.0%, QMAR -3.0%, DRYS -0.9%... Other news: VSGN -9.1% (raises $16 mln through sale of common shares and warrants), SNIC -7.3% (downgraded to Hold at Roth), SEPR -6.5% (boutique firm downgrade), DUSA -5.5% (profit-taking after yesterday's gap up), DNDN -4.1% (will delay Provenge, cuts jobs - Seattle Post-Intelligencer).

Pre-Market - Friday May 18th

Futures indicate a higher open for stocks. M&A news is leading this morning's headlines as MSFT has agreed to acquire AQNT for $66.50/sh, an 85% premium from yesterday's closing price. In addition, GE is reportedly near a deal to sell its plastics unit for ~$11 bln. On the Earnings front, retailers KSS and JWN reported better than expected earnings and raised fiscal year guidance. It's also worth noting China said today it will widen the Yuan trading band, while increasing deposit and lending rates.

Notable pre-market Calls include Upgrades: PCLN, VZ and REP at Citi, NYX at JP Morgan; Downgrades: JNPR at Citi, MO at Matrix, VCLK at Needham... On the Earnings calendar, no cos are confirmed to report today... On the Economic calendar, preliminary May Michigan Sentiment (consensus 86.5) will be released at 10:00ET.

Gapping up on strong earnings/guidance: INTU +11.0%, FMCN +6.8%, RDY +5.6%, TOPT +4.4%... M&A: AQNT +78.3% (to be acquired by Microsoft for $66.50/share... up in sympathy: DGIT +9.4%, VCLK +9.0%, THK +8.1%, VSCN +6.2%, MCHX +4.2%, ONSM +3.3%), TONE +32.0% (to be acquired by CapitalSource for $34.46/share)... Other news: CHIP +17.8% (profiled in BusinessWeek Online), OMR +41.7% (Deep-sea explorers discover possible richest shipwreck treasure in history - Fox News), TRMP +14.8% (announces status of strategic review), APKT +3.8% (upgraded to Buy at Cantor), BWLD +3.4% (to acquire Las Vegas franchised restaurants, announces 2 for 1 split), CY +2.9% (bullish comments from Cramer).

Courtesy of Briefing.com

Base and Break Trades - Apple Inc. (Public, NASDAQ:AAPL), Crocs, Inc. (Public, NASDAQ:CROX)

Yesterday I was on the wrong side of the trade when the iPhone rumour hit the street. Today I was on the right side of the trade when the real news came out. This was a low risk narrow B&B setup with convergence of the MAs just under price. I used a buy stop order, set my stop and went to make a cup of coffee. By the time I came back, my target was surpassed so I took a partial. I read the news and sat back to see if AAPL could take out its all time high. Maybe tomorrow!
Yesterday CROX gapped up but faded. I really like the daily chart for CROX and when I saw the narrow afternoon base, I put CROX at the top of my watch list for today. I took a partial after 1 pt. because this was a pivot point area. I exited the balance on weakness going into lunch.

COP showed up on one of my IB pre-market filters along with TOT. COP had a nice base and break pattern on both the daily and intraday timeframes. This is a perfect example of a Highchartpatterns.com setup. I won't be surprised if they took this trade today as well.

Dummy Trade of the Day - DUSA Pharmaceuticals, Inc. (Public, NASDAQ:DUSA)

DUSA was a gapper from the Briefing.com gapper list. It consolidated the gap with a 25% retracement of yesterday's low to the ORH. The 3rd and 4th bars were NR and allowed for a low risk base break entry with good support from the rising 5 period EMA. The entry bar easily took out the ORH. I took a partial at the 38% Fibonacci extension and exit the balance as price approached the 62% extension.

NASDAQ Technical Picture - Bulls Fight Back

After some early session weakness, the NASDAQ managed to bounce back on lighter volume. The trend of higher volume on the sell side and lighter volume on the buy side usually foreshadows a deeper correction. The NASDAQ might be carving out a mini H&S top - a lower high would lead into this pattern.

Economic calendar: initial claims at 8:30; leading indicators at 10:00; and Philadelphia fed at 12:00.

Companies moving in after hours trading in reaction to earnings: Trading Up: ACXM +18.3%; SPTN +2.7%; MNT +2.6%; SXE +1.9%; HPQ +1.2%... Trading Down: OPNT -10.4%; NAPS -3.9%; SUSS -1.5%; CRM -1.2%...

Companies moving in reaction to news: Trading Up: ACXM +18.3% (agrees to be acquired by Silver Lake and ValueAct Capital for $3.0 bln, or $27.10 per share); PAE +13.3% (Sony Pictures Worldwide Acquisition Group acquires from PAE all U.S. rights to dramatic feature "Winged Creatures"); GRB +12.9% (raises 4Q07 guidance); CLN +12.0% (Clinically meaningful activity of ThermoDox and Hyperthermia in the early stages of a Phase I study); NINE +10.5% (wins open bid for paid services); SUNW +3.5% (announces $3 bln share repurchase authorization); EMKR +1.9% (receives notice from NASDAQ due to delay in filing of form 10-Q); WFR +1.2% (authorizes share repurchase program for up to $500 mln of common stock); PLUS +1.0% (receives notice from NASDAQ due to delay in filing of form 10-Q)... Trading Down: NETC -2.9% (announces Anatel's authorization for the acquisition of Vivax); MU -2.4% (proposed $1.1 bln offering of convertible senior notes); MEDX -1.4% (announces the appointment of Howard Pien as President and CEO and member of the Medarex Board of Directors); ORBC -1.3% (announces agreement with major wireless carrier; begin offering terrestrial wireless services to complement its satellite-based wireless); NT -1.2% (reaches settlement agreement with OSC staff); INFS -1.1% (announces departure of President and CEO).

Dummy Trade of the Day - Forest Oil Corporation (Public, NYSE:FST)

FST gapped up and consolidated for two hours in the middle of the OR before setting up a break of the ORH. The entry had good support from the 5 period EMA. After the break, it retested the ORH as support and moved up from there. I exited on a volume spike as I felt that the end of the move was imminent. It continued to rally above the 100% Fibonacci extension and finally printed a red bar with a long upper shadow, so I shorted a break of the previous bar low and covered as price approached the rising 5 period ema. The distance between price and the ema was just too wide, so I felt to two would meet before the end of the session. THX was another gapper on my scan that made a similar move as FST.

iPhone Delay is FALSE ALARM - Apple Inc. (Public, NASDAQ:AAPL)

Apple: Engadget issues false alarm on Apple story

Engadget now writes "While our source that provided us the information is solid, we just heard back from Apple PR -- they let us know that the iPhone and Leopard are both still on track, and should meet their expected launch timeframes. We'll keep you up to the second with any further developments."

On a personal note, I was long AAPL when the false alarm was issued and I was stopped out. Decided to short before I knew what was happening - covered at $105. This sort of screws up the whole chart.

NASDAQ Technical Picture - Distribution into Key Support Zone

After yesterday's choppy session, the afternoon sell off was a welcome change in that it provided day traders with some direction. Things could get interesting as we come into our first real test of the April breakout point. Two distribution days over the last 5 sessions, puts the bears firmly in control.

Keep an eye on intraday pivot points as these will help you pick low risk entry points. Price often consolidates at the cusp of a pivot before making a big move.

Tomorrow's economic data is focused on Housing at 8:30; Industrial production and capacity utilization at 9:15 and crude at 10:30.



Companies moving in after hours trading in reaction to earnings: Trading Up: ERS +10.3%; PDEX +9.4%; PMRY +9.3%; CPWR +9.0%; CVLT +1.9%; SCR +1.5%; DTSI +1.4%... Trading Down: SLRY -21.6%; GOAM -13.0%; PFSW -7.7%; GPIC -6.7%; BLUE -6.7%; MSII -6.0%; SPIR -5.2%; FRPT -5.0%; FUEL -4.7%; AMAT -3.8%; PLAB -2.7%; HRBN -2.1%...

Companies moving in reaction to news: Trading Up: ACM +10.5% (announces closing of initial public offering); ASTI +4.3% (Paulson Capital discloses 11.5% stake in SC 13G filing); OVEN +1.8% (receives additional NASDAQ staff determination notice); OSTE +1.5% (expands tissue supply relationship with Community Tissue Services)... Trading Down: ESLR -3.8% (announces public offering of common stock of 15 mln shares); TPP -2.0% (prices $300 mln offering of junior subordinated notes); KMR -1.0% (announces public offering of listed shares). Courtesy of Briefing.com