Dummy Gapper Trade of the Day - Barrick Gold Corporation (USA) (Public, NYSE:ABX)

ABX is a WL stock and was also a Briefing.com gapper this morning along with several big gold plays on expectations for 2008. Gold is also a flight to safety in an uncertain geopolitical environment. ABX gapped up just above yesterday's range into R2. The second bar was inside, closing on the cusp of R2. I placed a buy stop order two pennies above the ORH.

The daily chart highlights two targets. The lower line is a minor pivot area at the round $ number $42.00 and lines up closely to the 62% Fib. extension of the previous day low to the ORH. The second level target is the November reaction swing high.

I took a partial after price tagged the 62% Fib level and pulled back. I was prepared to allow for a 38% retracement of the move from ORL to the morning swing high, but price held the 5 period ema on a closing basis, carving out a bullish flag on declining volume. Afternoon trade involved several consolidation zones, however, price held the 5 ema which had a nice 45 degree angle, and there was never any reason to exit the trade until the close as the 2nd level target felt like it could be attained as volume accelerated into the last hour.

Dummy Trade of the Day - Cree, Inc. (Public, NASDAQ:CREE)

Briefing note at 10:20 a.m. CREE spikes to session highs as Amtech analyst on CNBC highlights stock as play in the LED lighting space (24.48 +0.98) .Cree was also highlighted favorably by IBD on Friday. It also has very high % short float.

I entered long after price consolidated the intial thrust from the positive Amtech analyst comments on CNBC. I took a partial after a 1 point gain and moved my stop on the balance to break-even, allowing for a 38% Fib. retracement from the session lows to the swing high. A second entry was possible off of the mini C&H pattern midday. I should have added back my original share size on the break of the C&H, but I was cautious given the % change thus far.

Gapper - LDK Solar Co., Ltd. (Public, NYSE:LDK)

Joe traded LDK today for a nice gain, but feels he left too much money on the table. How would I have traded it? I'd would have placed my Fib extension lines from the previous day high to the flat base as opposed to the ORL. Short on a breach of the base with the 5 ema in very close proximity acting as resistance. Generally I exit after 3 WRBs, but LDK capitulates on a huge volume spike on the second WRB. So, normally I would partial out and move my stop about 5 cents above the WRB. This WRB is really wide and the fact that it happens right at lunch time is a good excuse to cover 100%, otherwise it means a potential stop out or a long drawn out consolidation through the lunch time doldrums.

In mid afternoon, LDK starts to setup a reversal as it takes out the 5 ema on a closing basis. Note that there is no volume to support the move, and it can't break the round $ number $50.00. Eventually, it carves out a mini rounded top which is bearish (supply > demand). You can short the confirmed hanging man and catch the next leg lower. Notice how volume picks up and accelerates into the close. If you look at the daily or the wide view of the 15 min, you'll see that this was a gap fill dating back to December 7th.

Dummy Gap Fade - Celgene Corporation (Public, NASDAQ:CELG)

CELG cratered on the open and then bargain hunters moved in. It set up a perfect dummy long (NR7 inside) as it based narrowly at the cusp of the reaction swing high (second bar high). I exited at the 100% Fibonacci retracement of yesterday's close. That was equivalent to my trade mark 3 WRBs exit strategy.

Later in the day, I took a second entry off of the 5 minute chart as it formed and inverted H&S pattern.

I highlighted WFR last night on the daily as a potential BO candidate. A small gap open followed by a choppy consolidation did not generate much interest until after it retested and held yesterday's high as support. After that, it was just a matter of waiting for a NRB above the 5 period ema.

So I traded the same two stocks as yesterday with much better results, especially on CELG.

Dummy Trade of the Day - Celgene Corporation (Public, NASDAQ:CELG)

I had planned to partial out at the lower blue support line but I got stopped out prematurely. Too bad, as you can see from the charts (15 min. and daily), this was a really nice setup with a high probability of retesting the recent lows.

WFR was just a scalp, but looks like it wants to BO of this trading range so keep it the focus list for tomorrow.

Low Volatility Breakout Leading to Parabolic Move - Canadian Solar Inc. (Public, NASDAQ:CSIQ)

I wrote about the "Low volatility Breakout" back in July 2006. All of the criteria I elaborated back then apply to this trade setup for CSIQ. The only difference is that back then I used a 10 period EMA and now I use the 5 EMA (the 5 comes from Trader-X).

The only other observation I would add now from further experience is that for trending stocks on lower time frames such as this, the first consolidation bar usually holds as support. If it doesn't, it almost always leads to some sort of retracement. The red line segments are areas where I tightened my stop. After the break above resistance, allow for a retest of the BO point.

Parabolic moves usually have sharp reversals, so you want to be ready to take profits quickly. After price failed to hold $27.00 I immediately tightened my stop to $26.50 for a stop out. The ideal entry is at the break of the blue line, but I didn't mind the late entry because the setup met all of the criteria. At the very least, I expected it test resistance. (charts - daily, followed by 15 min, and 5 min.)

Dummy Trade of the Day - MEMC Electronic Materials, Inc. (Public, NYSE:WFR)

WFR was highlighted in last night's HCPG's newsletter. The first chart is 15 min., followed by 3 min. Early weakness set up a highly predictable move back down to the recent trading range pivot lows. This was followed by a 62% Fib. retracement of the move from ORH to the morning swing low. I wasn't sure how far it would retrace so I partialled out.

NASDAQ Technical Picture - Uncertain

A very volatile, negative week with the S&P 500 giving back roughly half of the surge off the Nov low. The close on the lows of a bearish weekly candlestick (dark cloud cover) suggests potential for additional pressure early next week. Two NRBs on the NAZ look like a consolidation or pause ahead of further weakness (bearish engulfing on the weekly). Overbought/Oversold bias is more or less neutral, but moving quickly lower.

Sentiment - Broad market volatility moved higher this week with the VIX up 8.5% from last Friday's close, now at 22.6 and tech volatility increased with the VXN (Nasdaq Volatility Index) higher by 6.3% on the week at 25.3. There were big swings in the equities markets this week following the FOMC rate cut and the Fed's decision to partner with banks to improve liquidity. With the mkt unable to hold on to the gains following Wednesday's concerted effort to provide liquidity, uncertainty remains evident. The SPX lost 1.7% this week, the Dow is -1.5% and the Nasdaq is -1.9% on the week.

Thursday's Trades

FLML tested and breached the intra-day pivot in early trade, followed by a retest and the formation of a shallow rounded base, setting up a low risk dummy long. This setup is very similar to the VMW trade on Tuesday.

RIMM became a BO candidate after testing the pivot point (blue line) several times in early trade on both Wednesday and Thursday. The move from the PP back down to retest Wednesday's low was on tepid volume. The reversal at 2:00 carved out two bullish WR green sticks on an uptick in volume. This move was decisive and was followed by an inside bar in the upper half of the second WRB. I entered long on a break of the inside bar before the actual PP break. Locked in some gains just below $103.00 and waited for a possible retest of the PP, keeping a close eye on the lower time frame to monitor volume on the retracement (lower volume on the pullback implies a retracement as opposed to a reversal). The PP held as support and price expanded nicely into the close.

Trader-X and Tom C.

Trader-X - The silence is broken.

Tom C. - Trader-X protege has a new blog. Tom's blog boasts a witty name "EST. 2007". Okay, it's late and I'm feeling a little brain dead. EST - Eastern Standard Time or Expressed Sequence Tag???

Dummy Trade of the Day - VMware, Inc. (Public, NYSE:VMW)

VMW is a WL stock and was also highlighted on the HCPG newsletter last night. Despite the narrow gap, yesterday's wide range gives the Fib. extension a lot of potential.


The key take aways on this setup are:

• yesterday's high holds as support (blue line);


• 8th bar is NR7 inside;


• 9th bar closes on its high setting up a mini base in very close proximity to 5 period ema;


• rounded bottom is very bullish - demand exceeds supply which means that each time sellers try to push price lower, they are met with more buyers.

I partialled out as price approached the Nov/Oct reaction swing highs as I thought it might hold as resistance ahead of the FED. I folded just under the 50% Fib. extension of the previous day low to the ORH. In retrospect, that last move was dumb because the $100.00 psych level was within reach.

My post fed trade was short the Qs. The market had already priced in a 50 basis pt. rate cut so the 25 was a big disappointment.

Dummy Gapper Trade of the Day - Amgen, Inc. (Public, NASDAQ:AMGN)

AMGN from the Briefing.com gapper list was just one of many weak biotech stocks today (CELG - 52 week low).

Tweezer top reversal at the base of the ORH, plus pressure from the downsloping 20 ema, set up a perfect, low risk short. Unfortunately, the round $ number $50.00 was a strong support level.

Pre-Market - ATHN

I mentioned that I was adding ATHN to my watch list on November 2nd. It had a flat base BO EOD yesterday and looks poised to BO of this triangle pattern on the daily.

Dummy Trade of the Day - Crocs, Inc. (Public, NASDAQ:CROX)

The first chart is a daily of CROX. The key take aways here are the NRIB at the base of pivot point resistance. The PP is derived from price action in early November after the wide earnings gap. Price pivoted off the blue line on day two following earnings and then price pivoted into the resistance of the blue line on day four. After a month of consolidation we came back to test the PP on Tuesday, followed by a NRIB at the point of convergence of the 5/20 MAs on Wednesday.

Yesterday's OR tested the daily pivot (blue line). I watched it closely until shortly after 11:00, hoping that price would find support at the rising 5 period ema. After lunch, I came back to it and all of a sudden things starting looking optimistic again. Long on a break of the PP base after NRIB (NR7). It broke out on an uptick in volume and paused shortly after at the 38% Fib. extension of the LOD (low of the day) to the base (blue line). The consolidation was orderly on declining volume. Once it took out the 38% level, it went vertical on accelerating volume. Sweet.

Dummy Gapper Trade of the Day - Apple Inc. (Public, NASDAQ:AAPL)

AAPL gaps wide and quickly takes out the ORH and R2. 4/15 NRIB (narrow range inside bar) on lower volume is the trigger bar. I was actually hoping for a second IB, but it looked good on the 5 minute so I took it. Book a partial as price approaches 38% Fib. extension of the previous day low to the ORH. Stopped out on balance as price dips below the 38% Fib. retracement of the ORL to the morning swing high.

Dummy Trade of the Day - Research In Motion Limited (USA) (NASDAQ: RIMM)

My third consecutive RIMM trade: the key take away here is yesterday's midday pivot holds as resistance as RIMM retests in early trade. Also notice that the wide opening range is not supported by the level of volume needed to build momentum. The seventh bar is NR7, followed by a shooting star - an invitation to short as price falls under the converging 5/20 MAs. My expectation on these types of contraction/expansion trades is 3 WRBs, so this one played out perfectly as price swooned, on accelerating volume, into S2 (red line).

Friday's breach of the rising wedge proved to be decidedly bearish indeed. Today's low was psychologically significant ($100.00), as well as technically significant. Not sure how this will play out, but if we get some NRIBs at the base of support, we might be setting up for more downside. The volume on this three day move shows that the bears own it. Let's see if the bulls will come out and play defense.

Dummy Trade of the Day - VMware, Inc. (Public, NYSE:VMW)

I was watching VMW originally as a potential short, but after carving out a higher low, it started to make a compelling long setup especially on the 5 minute time frame below. The choppy looking 15 minute pattern is actually an ascending triangle on the lower time frame.

A second entry was possible after it held the intra-day pivot and rising 20 ema as support, but I missed it. The first PP test resulted in a wide range red hammer (not low risk), but the second test was a smaller more bullish green hammer and a higher low as well.

RIMM gapped lower on the open after another analyst valuation downgrade. After a fast move lower into S2, it retraced back up to the ORL and started offsetting. It did eventually manage to close above the ORL, but couldn't hang on for long. I shorted a semi-triangle pattern which is easier to see on the 5 minute chart below.

It did not play out as planned, and by mid-afternoon, I was anticipating a stop out, but it eventually went my way. The one caveat I had going into the trade was the distance between price and the down sloping 20 period ema on the 15 minute time frame. Ideally these should be closer because we know that this type of trade will be slow until the morning pivot low is taken out. Allowing for a retest is easier with a tighter 20 ema. The point being that, any attempt to retrace back towards the 20 should not put our initial stop in peril.

Dummy Trade of the Day - Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

RIMM was my only trade on Friday. After gapping up on the open, it made a decisive move lower on high volume. The fourth and fifth bars were inside on declining volume in the lower half of the third bearish WRB. The S2 pivot point level (red line) held as resistance and the second inside bar closed near its low. Short as price crosses below $118.00. The setup is quite obvious on the 5 minute chart below.

The two blue lines mark potential support at the gap open from earlier in the week, and support at $113.00. As you can see from the 5 minute chart, the gap open level did not provide support on the way down, but it did provide resistance in the afternoon.

The price and volume pattern on the daily chart below looks like a bearish rising wedge, with Friday's bearish engulfing bar setting up the breach for the next leg lower. However, we also have a convergence of MAs which could grab and hold price up. We'll see how this plays out next week.

Dummy Trade of the Day - NVIDIA Corporation (Public, NASDAQ:NVDA)

NVDA was my only trade on Thursday, a follow-up to Wednesday's failed retest of the the ORH. The green line marks the ORH from the previous day which held as resistance all afternoon. It's always a good idea to keep S/R lines on the charts until they are out range. This way, when they come into play, the setup is much more obvious.

Thursday's successful retest of of former resistance as support followed by NR7, setup a low risk long. Price quickly expanded to test $34.00 which did not hold, so I exited just under the round $ number for a nice quick profit leading into lunch.