NASDAQ Technical Picture - Bounce on Fed Policy

Markets rally on the Fed policy statement. Investors were happy to hear that the soft landing strategy is still in play. The NASDAQ rallied into resistance on increased volume.

DELL - AH traders were enthused to hear that Michael Dell assumes role of CEO - Kevin Rollins is toast.

Dell: Michael Dell Assumes Duties as CEO, expects Q4 results to be below estimates (24.22 -0.07) -Update : Co announces that Michael Dell will assume the duties of CEO, effective immediately. Dell, who will retain his duties as Chairman of the Board, will replace Kevin Rollins. Co also said that it expects its 4Q07 results to be below the average of First Call estimates for both rev and EPS. (Briefing.com)

GOOG earnings - big beat, but not as big as the whisper numbers I guess. After the shakeout, the AH session closed where this morning's session began.

Google beats by $0.27, ex items (501.30 +6.98) : Reports Q4 (Dec) earnings of $3.18 per share, excluding tax benefits and stock based comp expense, $0.27 better than the Reuters Estimates consensus of $2.91; revenues including Traffic Acquisition Costs rose 67.0% year/year to $3.21 bln vs the $3.14 bln consensus. Revenues excluding T.A.C. were $2.23 bln vs $2.2 bln First Call consensus. GOOG owned site revs rose 80% YoY to $1.98 bln, represents 62% of total revs; paid clicks rose 61% YoY.

Google Conference Call Summary -Update : Says business continues to be very strong... says they are gaining share in almost every country... says developing products that are appropriate for global companies... says showing fewer ads per search but they are experiencing better click thrus... says starting to see the benefits of partnerships; notes YouTube business is going well... notes GOOG Checkout is doing well for the co... AdSense business saw significant traffic gains... aggregate paid clicks grew 61% y/y, 22% sequentially; CheckOut adoption rates exceeded co's expectations... Co says International business was strong in Q4; notes did receive some benefits from currency conversion rates... see 'encouraging growth' in Asia markets... expect continued growth in headcount; says will continue to invest in distribution partners and content... Says had a good session with Ernst & Young regarding Google Checkout revs; says magnitude is hurt revs by ~1% sequentially due to accounting methodology of Checkout... co notes conversion rates have been strong and that customers are looking at it as an investment; notes Blue Nile (NILE) gave co feedback... says 2007 will be the year that mobile search query will grow significantly; making a significant investment in mobile and expects to see results in 2008... Co notes running YouTube separately; looking into revenue sharing with people who submit the data; says too early to know when but expects that YouTube will be a potentially large revenue stream for them... CapEx: as long as we have a growing business like we do today, we have no choice but to invest in the business... co notes they will not comment on specific rumors... does note that YouTube have a number of 'interesting deals' for content coming... YouTube as a destination media brand: co says pushing hard for the success of YouTube as a brand; says taking time with the integration to preserve the value of it... is encouraging copyright owners to submit videos to them for presentation; says will be ways of linking advertising with their partners and customers to various engines they have... Personalization: co still pursuing this; notes have a ways to go in promoting those features; says excited about this area and starting to see some traction... co notes International markets are growing faster than the U.S. but states that the U.S. markets are still growing at a very strong rate... Asked about traditional TV advertising: Co says they are experimenting with traditional TV advertising; says it is fair to say that whatever they do will be different from the models that business currently operates under... call has ended. (Briefing.com)

Dummy Trade of the Day (Gap Fade) - SanDisk Corporation (Public, NASDAQ:SNDK)

SNDK gapped down well below its bullish gap support dating back to 25-07-2006. The first bar was WR with a long upper shadow. The second bar was a doji which held the low of the first bar. The third bar was almost an NR7, inside bar on lower volume. The fourth bar easily took out the third bar high on an uptick in volume and it was time to fade the gap. The prelim. target was the failed gap open support mentioned above. The target was easily reached with only a short consolidation period as price traded in the area of the opening range high. I exited 50% when the target was reached. I exited the balance when price pivoted from the target and started coming in fast.

Click on charts to enlarge

N.B. - I spotted SNDK last night in AH on disappointing earnings and added to my watchlist. SNDK was very active in the pre-market and it was highlighted on Briefing.com's gapping down list this morning.

NASDAQ Technical Picture - Snooze Fest Ahead of the FED

Anticipating more of the same ahead of tomorrow's FED policy statement. I won't be trading much tomorrow, and I won't be holding any positions going into 2:00 EST.

The economic calendar for tomorrow is full including: Adv. GDP at 8:30, Chicago PMI at 9:45; Construction spending at 10:00; Crude at 10:30; and the Fed at 2:15. And, as if that wasn't enough, we have GOOG reporting AH.

Dummy Trade of the Day - United States Steel Corporation (Public, NYSE:X)

X gapped up on the open and after a sharp pullback to yesterday's low, it rallied 3+ points in less than an hour. At 10:30 it started pulling back to retest the breakout point (former resistance becomes support as marked by the green line). After a lengthy consolidation, it carved out a shallow base from which to continue its momo move. My entry was on a break of the blue segment and I exited just under $81.00 on the second last bar as it felt like it just couldn't go higher.

N.B. - X is one of my momo watchlist stocks, but it also showed up on one of my gapper scans this morning as well as Briefing.com's preview of stocks gapping up which you can access every morning from Trader Mike.

Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

CAL had been on a steady slide for a week and half. This morning in the pre-market, it started gapping up. Knowing that if the stock broke the pre-market high, it would likely set off a squeeze on the bears, I readied myself to trade this on the lower timeframe. I used the 5 minute timeframe for the entry on a bull flag break, on an uptick in volume. Once the trade was well underway, I managed the trade from the 15 minute timeframe, moving my stop just below the low of the previous bar. I was stopped out on the 7th bar. The stop out was unfortunate given that stock turned around shortly thereafter and went up another $0.70, but that's the way it goes.

The squeeze play moves very fast and is generally not low risk, however, if a suitable entry can be found on the lower timeframe, the reward is usually worth the extra risk.

NASDAQ Technical Picture - Market Churn

Market churn - one day up, the next day down - that's been the story for the past seven sessions. Once again, the NASDAQ held support at 2420 in early trade on Friday and managed to chop around a narrow range all day closing up 1.25 pts on the day. The $SOX was the tech leader yesterday with some semiconductor equipment manufacturers pacing the way KLAC, CY, SNDK, TXN.

Dummy Trade of the Day - Rambus Inc. (Public, NASDAQ:RMBS)

RMBS showed up on my Trade_Ideas gapper scan yesterday morning. I missed the first two trading opportunities, but having read Briefing.com, I knew that RMBS was moving higher due to a favorable litigation outcome. After a power scalp at lunchtime, it started consolidating in a narrow range so I kept my eye on it, alternating between multiple, intraday timeframes. From the 10 minute timeframe above, you can see that I entered long just before the consolidation break on an uptick in volume. This is the ideal way to trade RMBS, because once the break occurs, it moves really fast. The exit was quick (average price $19.15), because, as you can see from the noon breakout, the pullback was quick and severe.

The 1 minute timeframe below shows how volume dried up during the consolidation phase and started to pick up around 2:05, just minutes before the break.

Technical Trade Idea - Broadcom Corp. (NASDAQ: BRCM)

Click on chart to enlarge

BRCM - next earnings release Feb. 8th.

Today's tag of the broken lower channel line was a prime opportunity to short BRCM. If it can take out this week's low, the next target will be $27.00.

NASDAQ Technical Picture - Bearish Engulfing Pattern

Another WR red stick, the third in six sessions, and this time it's an ominous looking bearish engulfing bar which closed below the 50 MA. It's starting to feel like the bears are going get the upper hand. We have minor support at 2425 and then we're looking at 2400. MSFT guidance after hours was not compelling...

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

Today's market gap up was a screaming fade as the NASDAQ and Q's hit a wall of resistance on the open. The first pullback felt like it might rally but just ended up chopping around. Lunch time became the prime opportunity to look for a low risk entry on a weak stock. There were several candidates but I finally went with NVDA because it consolidated the first leg down in a tight narrow range as it waited for the downsloping 10 period MA to catch up to price.

NASDAQ Technical Picture - Bulls Taking Back Control

Renewed optimism from some tech bellwethers such as SUNW and YHOO brought a wave of buyers back into the NASDAQ. The NASDAQ completed a bullish three day morning star reversal pattern paced by internets and hardware. Look for possible continuation tomorrow on the heels of EBAY's $0.03 earnings beat (EBAY shares up 12% in AH). We are approaching resistance at 2475 again, so keep that in mind if we gap up on the open.

Dummy Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

The chart above is a 10 minute chart of CAL which gapped lower for the second straight day. Today's long lower shadow on the OR bar hinted of a gap fade and that's why I was quick to change over to the shorter timeframe. I took a low risk long entry as the third 10 minute bar opened. My target was the area between yesterday's low and close. My target was reached shortly after 11:00.

My next trade with CAL was short, which setup perfectly on the 15 minute timeframe below. Around noon, CAL carved out a gravestone doji reversal stick on the resistance line. The following bar was a spinning top and when the next bar took out the 10 period MA, I went short and covered as price hovered on the $43.00 mark for and extended period.

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Dummy Trade of the Day - Continental Airlines, Inc. (Public, NYSE:CAL)

Today's dummy trades include one short and one long from last night's watchlist. CAL gapped down on the open and carved out a WR red stick. Price consolidated in the lower half of the OR bar for the next 45 minutes. The fourth bar tagged the downsloping 5 period EMA and closed on its low, so I took a short position on the open of the 5th bar. I was trading from home today so I was able to incorporate the Fibonacci extension into my chart as it was difficult to determine an accurate level of support. I covered 50% as price tagged the 38% extension and I was stopped out on the balance shortly thereafter.

You'll notice I've adopted a few more trading techniques from Trader-X here, namely the 5 period ema and the Fibonacci extension. They were very helpful in this trade setup and I will be experimenting with them more often, especially on short entries which are not my forte.

KKD, another watchlist stock is self explanatory - a low risk breakout play just above support from the rising 10 period ema.

Momo Watch List Update

I'm adding KKD to the watch list as it has a very bullish base on the weekly timeframe.

The best setups are CAL and MNST because they both observed their respective breakout points as support and appear poised to reverse after the pullback. KKD is a continuation setup with a short-term target of $13.00. GROW is a long on a break of today's high. INFY could also break on more volume. The remainder need more time to develop.

NASDAQ Technical Picture - Bears Losing Momentum?

Sellers continue to have the upper hand but volume is diminishing and the ADX line is still flat-lining. Price held at minor support (2425) indicating that we may get a technical bounce as we approach oversold levels.

Dummy Trade of the Day - Krispy Kreme Doughnuts (Public, NYSE:KKD)

I initially planned to trade short based on today's open, however, when I ran my gap down scan, I had over 80 hits and could not take the time to work through such a long list. So I went the contrary route and used the gap up scan with a manageable 10 hits, to look for some trading opps. It took quite a while, but I managed a good setup with KKD and a failed setup with HANS.

These are 30 minute charts.

KKD gapped up on the open and failed to take out resistance on the OR bar. This was followed by a fairly deep pullback and reversal. As price approached resistance for a retest, the bars started to narrow. The sixth bar was NR7, so I set myself up for a dummy long entry on a break of the NR7 high.

HANS gapped up on the open and had an orderly pullback to support which held for two consecutive bars and I took a dummy long entry on a break of 7th bar high. Unfortunately, the trade went nowhere. I'm blaming the failure on the market and the fact that there was no real reversal signal in terms of candlestick patterns.

Watch List - U.S. Global Investors, Inc. (NASDAQ: GROW)

The sell off in GROW looks a overextended. Friday's NRB at support hints of a potential retracement back up to the MA crossover level. Positive divergence of the RSI is quite evident on the 15 minute timeframe.

NASDAQ Technical Picture - 50 MA Holds on Lower Volume

Options expiration was a real snoozefest and resulted in fairly narrow range trade on lower volume. Tech sectors were mixed. The SOX and networking paced the way up in the morning as the recent sell off was a little overdone. The 50 MA managed to hold as support and by the end of session, the NAZ managed to get back 8 points.

The weekly chart carved out a dark cloud cover reversal bar on the week, but still maintains a bullish stance above the 10 period MA.

Earnings this week include: TXN on Monday, YHOO, AMD and CTXS on Tuesday, RMBS, EBAY and FFIV on Wednesday, and MSFT on Thursday.

NASDAQ Technical Picture - Bull Trap Confirmed

The NASDAQ cratered on uninspiring guidance from AAPL and LRCX on the heels of a mediocre earnings report from INTC. This was the biggest one day loss since November 27th and confirms my initial fears regarding last week's breakout - the dreaded bull trap. All tech sectors participated in today's sell off, paced by semis and hardware.

IBM is trading down 5 points in AH due to lacklustre guidance. Tomorrow's Option expiration session could be interesting for a change.

Trade of the Day - NASDAQ 100 Trust Shares (ETF) (Public, NASDAQ:QQQQ)

As mentioned last night, this last breakout felt like a bull trap. This morning I felt even more strongly about it and so I shorted the Qs on a break of the pre-market low. My original stop was the pre-market high. As you can see from the chart, by 10:30, I was comfortably able to move my stop to breakeven. I covered into the close.



ICE managed to stay within yesterday's range until mid-afternoon when it swooned down for a test of yesterday's low at $127.50. It quickly pivoted from that point and started to rally so I took a scalp trade as price crossed back above $128.00. As price moved above $129.50, I tightened my stop to $129.00. It briefly crossed $130.00 and started coming back in fast, so I decided to book my profit at $129.50 rather than hold into the close.

Momo Watchlist Stocks

Thanks to Basim for pointing this one out.

Also check out charts of interest at HCPG