Trade of the Day - Network Appliance, Inc. (Public, NASDAQ:NTAP)

NTAP

Above is the daily chart of NTAP which has been on my watch list ever since it gapped down on huge volume on May 24th. The key take away here is the pivot support at the $29.00-$28.70 level. After holding support in the $30.40 area for most of the month, NTAP gapped down again on Thursday, carving out a NRB. On the 15 minute timeframe below, you can see that it established a base and break setup which was begging to be broken on Friday.

As mentioned in my pre-market post yesterday morning, NTAP was gapping lower. On the open it tried to recapture the the base and failed. I took an aggressive entry with a stop just above the Thursday's closing highs. NTAP took a nice, orderly swoon into the 38% Fibonacci extension of the previous day high to the ORL at which point, I took a partial and tightened my stop, hoping it would extend to my PP support target of $29.00 which matched up with the 75% extension. It was a long wait, but NTAP finally came within pennies of the target in the afternoon.

MRVL

Initially, the MRVL chart did not inspire much confidence because of the doji OR with a long upper shadow. However, after much narrow range choppiness, it appeared as if MRVL could be a B&B candidate as it twice tagged $17.87 followed by a shallow pullback. I entered a Buy stop limit order which was filled on the break. I watched carefully to make sure it didn't cave at the ORH. It managed to close above it and then ascend to the 38% Fibonacci extension.

My target was the 62% extension ($18.45) because that matched the PP resistance on the daily chart to the penny. I took a partial and planned to stay in the trade for a normal retracement (38%) of the last leg up. The strategy worked perfectly and I closed the balance of the position as price approached the target.

The next chart shows the retracement on declining volume after tagging the 38% extension and the last chart is the daily.

NASDAQ Technical Picture - NR, Low Volume Fed Session

It was a narrow range quiet session leading into the FOMC policy statement at 2:15. The statement itself failed to provide direction and we just chopped around afterwards. At the end of the session we are left with a doji (indecision) with a long upper shadow (bearish).

RIMM came through with a very bullish earnings report and the stock tagged $194.00 in AH trade.

Companies moving in after hours trading in reaction to earnings: Trading Up: RIMM +16.18%; RBN +8.88%; BBOX +6.0%; MU +1.93%; FINL +1.25%...Trading Down: CBK -8.65%; TIBX -3.65%; ARRO -3.65%; COMS -3.55%; EGLS -2.80%; PALM -2.48%...Companies moving in reaction to news: Trading Up: CRYO +28.48% (Co and Boston Scientific announce strategic collaboration in atrial fibrillation; BSX purchased shares of CRYO); HLYS +9.27% (announces the withdrawal of its registration statement with SEC); APOL +7.92% (Board of directors approves up to $500 million in share repurchase); KOMG +7.64% (Western Digital to acquire Komag; $32.25/share in cash); COLY +4.23% (grants Dynavax license for commercialization of HEPLISAV) ACN +1.59% (raises FY07 EPS to $1.94-1.96 vs $1.93 Reuters consensus, up from $1.88-1.93); CYTK +1.46% (anti-cancer activity supports further development of Ispinesib in additional breast cancer trial); ROY +1.29% (updates investors on significant Development, Exploration and Pre-Feasability projects) ... Trading Down: AHM -10.86% (withdraws 2007 earnings guidance; Q2 loss will be limited); PPHM -10.65%.

Economic Calendar: Personal income/spending and Core PCE inflation at 8:30; Chicago PMI at 9:45; Construction spending and Michigam sentiment at 10:00.

Pivot Point Trade - Amazon.com, Inc. (Public, NASDAQ:AMZN)

The first chart is a wide view of the 15 min. timeframe for AMZN. The key take away here is how to map out the pivot points (blue lines - areas where price pivots and changes direction). The other thing to notice is that AMZN carved out a base over the prior two sessions and could have been in a position to move at any time. Today it opened at the cusp of the lower PP and set off my alert.

I moved to the lower timeframe and watched as it developed one of my favorite bullish bases - the W pattern with a higher low on the second dip. As price moved back up towards the ORH, I entered a stop order 2 pennies above the base. My order was filled as price and volume spiked. There's no retest of the base on this pattern, it just moves vertically at a very good clip. Notice that volume contracts on the second dip of the base. This setup works best on high volume NASDAQ stocks. Don't expect the same result if the second dip carves out a lower low. The criteria for this setup is that it must take place at the base of a PP and the W formation on the 1 minute timeframe must have a higher low on the second dip. Volume spikes on the breakout.

Dummy Gapper Trade of the Day - Cisco Systems, Inc. (Public, NASDAQ:CSCO)

CSCO showed up on my IB pre-market scanner. It gapped up and formed a shallow rounded base on the 5 min. timeframe below, allowing for a relatively early entry. My entry and stop were based on the 5 minute timeframe but once in, I managed the trade from the 15 minute timeframe above. I move my stop 2 pennies below each WRB upon completion. I took a partial at the 38% extension and when that bar completed itself, it carved out a doji with along upper shadow, so again I moved the stop two pennies below the doji, in case of a sudden reversal. CSCO rallied further with another WRB and then managed to move up to the 50% Fibonacci extension of the previous day low to the ORH (same on both timeframes). The next bar started to print red and I closed my remaining position.


My second gapper trade, AUY, was from the briefing.com gapper list and set up as a typical Trader-X style trade. It took out the ORL when it was still too far from the 5 period ema and then proceeded to carve out a bearish flag. The last bar of the flag, attempted to regain the 5 MA but failed and printed a bearish doji with longer upper shadow. It closed below the 5 MA at the cusp of the ORL, signaling further downside and I entered short on the next bar. Pennies can be significant on these lower priced stocks so it is important to get a good entry and to plan the exit just above the extension so as not to chase to cover the trade.

Base and Break Trade - Cephalon, Inc. (Public, NASDAQ:CEPH)

Amtech put in a good word for CEPH this am. It worked. The stock rallied all the way back up to its 50 DMA. On an intraday basis, it rallied from the open to its upper PP before stopping to consolidate. It then carved out a u-shaped bullish base and set up a low risk, B&B pattern. The target was the 50 DMA at $80.10.

Dummy Gapper Trade of the Day - NIKE, Inc. (Public, NYSE:NKE)

NKE gapped up on earnings and retraced slightly more than 38% of the move from the previous day low to the ORH. It then rallied back to the ORH but failed to capture it on a closing basis. This is not surprising because the retracement was quite deep and therefore, the stock was exhausted. That's why I prefer stocks that retrace less than 38%. On the next pullback, it carved out a higher low, price and volume contracted and the next attempt to break the ORH succeeded on a closing basis, so I entered long on the next bar. Price ascended in an orderly fashion until the last half hour when price ripped through the 38% extension and reached the 50. Fibonacci extension from the previous day low to the ORH.

NASDAQ Technical Picture - Holding the 50 MA

Another low volume, directionless day for the NAZ as we await the FOMC on Thursday. All major tech sectors ended the session in the red except biotechs which held a tiny gain into the close.

Economic calendar: Durable orders at 8:30; Crude inv. at 10:30.

Companies moving in after hours trading in reaction to earnings: Trading Up: SPEC +6.85%; NKE +4.79%; FUL +2.30%; ORCL 1.15%... Companies moving in reaction to news: Trading Up: CKNN +0.93% (announces new contract for powercash); DVAX +0.87% (starts HEPLISAV phase 3 in Europe; U.S. Study; and phase 2 in ESRD in Canada) VTIV +0.74% (acquires Chandler Chicco and Innovative Health) YRCW +0.69% (Plans to acquireShanghai Jiayu Logistics)... Trading Down: NUVO -19.16% (NUVO and Bayer HealthCare have agreed to terminate their collaboration on Alfimeprase); GSCI -5.58% (maintains Q2 and FY07 financial guidance).

Dummy Gapper Trade of the Day - Target Corporation (Public, NYSE:TGT)

TGT was on Briefing's gapper list this morning (same store sales at low end of guidance). At the outset it did not look promising, however, patience paid off as it set up a nice dummy, base & break pattern just above the ORL. I took a full profit at the 38% Fibonacci extension of the previous day high to the ORL as I had to leave early and my cutoff was 3:00 p.m. EST. You could also have waited for the ORL to be taken out as this also set up a dummy entry.

The chart above is the 15 min. timeframe of HANS. The point I want to make here is that a down trending stock will rally up to the 50 MA but won't be able to hold it. HANS did this yesterday and today, setting up nice, clean shorting opps on both days.

The chart below is the 5 minute timeframe which shows my entry on a mini base & break setup. I took a partial when price fell into yesterday's late day support zone. My target on the balance was $42.50 but I closed the position because I had to leave. Just after my exit, price fell within 5 cents of the target.

Pre-Market - Tuesday June 26th

Gapping down on weak earnings/guidance: RAIL -4.8%, WMAR -4.3%, LEN -3.4%, SCS -2.6%, KR -2.6%... Other news: LYO -4.0% (trading lower following Basell's proposed acquisition of HUN, as traders may now view potential LYO takeover as less likely), HSOA -3.4% (boutique firm making cautious comments), ADBE -2.0% (downgraded to neutral at tier-1 firm), TGT -1.3% (sees June same store sales near low end of 3-5% guidance).

Gapping up on strong earnings/guidance: GORX +10.9%... M&A: VMSI +51.6% (to be acquired by Roche for $75.00 per share in cash), EAS +20.9% (to be acquired by Iberdrola for $28.50 per share), HUN +16.4% (Basell agrees to buy Huntsman Corp for $25.25/share in cash- Bloomberg)... Continued momentum in select solar names: HOKU +6.2%, DSTI +4.6%... Other news: CTIC +4.4% (co says publication on Pixantrone preclinical studies demonstrates reduced Cardiotoxicity), BPHX +3.2% (co migrates billing system as part of multi-million dollar modernization project for Israel local authorities), SMSI +3.1% (initiated with an Overweight at JP Morgan), TASR +2.3% (co says white paper indicates TASER devices reduce excessive use of force liability claims and litigation against law enforcement; also hearing positive chatter related to potential contract).

BIDU upgrade is also gapping up.

Courtesy of Briefing.com

Trade of the Day - Hoku Scientific, Inc. (Public, NASDAQ:HOKU)

Another big day for HOKU. After retracing 38% (Fibonacci) of the last leg up on Friday, HOKU opened stronger and setup a nice long entry on a break of the ORH. I took a partial as price tagged the long-term pivot point and closed the balance at $11.50 as the stock printed two euphoric volume spikes on WRBs. We did not manage to close above the PP which is normal after euphoria has been reached, however, I'm sure that HOKU will retest today's high shortly.

THE opened with another downward thrust, but fell into support and reversed shortly thereafter, setting up a retracement trade. I was hoping we might get a little more mileage on this one after all that selling, but the markets weakened in the afternoon and THE followed suit.

Watch List - FWLT, JOYG

The following are 15 minute charts of Foster Wheeler Ltd. (Public, NASDAQ:FWLT) and Joy Global Inc. (Public, NASDAQ:JOYG)

Friday's strong finish could foreshadow a retest of the upper PP for FWLT.

Two consecutive lower highs implies weakness and a potential break towards the lower PP for JOYG.

NASDAQ Technical Picture - Setting Up for a Trendline Retest

Could be an interesting week as we set up for another test of the trendline.

Economic Calendar: Existing Home sales at 10:00.

RIMM reports earnings on Thursday.

Dummy Trade of the Day - TODCO (Public, NYSE:THE)

THE was a watchlist stock setting up for a break to the downside. It took longer than anticipated, but when it finally gapped slightly lower on Friday, I watched it carefully as it set up a low risk dummy short on a break of the ORL. It had a great risk:reward ratio of 1:10.

TASR set up a nice gapper dummy long after carving out a perfect hammer reversal bar followed by a low risk base and break. However, shortly after breaking out it printed a doji evening star like reversal, so I took the first opportunity to scratch the trade. Similar setups in the recent past have worked very nicely but TASR just traded sideways. Cross reference the charts for RS and OSG.

NASDAQ Technical Picture - Bulls Triumph Early Weakness

A nice pivot on the 10:00 reversal and the bulls take over. The $SOX provided leadership.

Companies moving in after hours trading in reaction to earnings: Trading Up: FREE +32.2%; JBL +6.9%; COHT +3.4%... Trading Down: TEK -1.7%; COGN -1.5%... Companies moving in reaction to news: Trading Up: CORS +11.9% (approves a special cash dividend on common stock of $1.00 per share); ICGN +10.0% (receives notification from McNeil of termination of collaboration agreement); SIRF +3.8% (to acquire Centrality Communications for approx $283 mln in stock and cash); MBLX +3.5% (announced German court confirms validity of Metabolix patent)... Trading Down: NUAN -1.8% (to acquire Tegic Communications); HOLX -1.4% (to acquire BioLucent for approx $70 mln); SWC -1.1% (announced tentative labor agreement has been reached for Stillwater Mine and processing facilities).

Hoku Scientific, Inc. (Public, NASDAQ:HOKU) Short Squeeze Spans Two Long-term Pivot Points

The first chart is the 5 min. timeframe of HOKU. Before entering long, I wanted to make sure that the long-term pivot point from the monthly chart below was secured. After much chopping around I decided to exit at the 38% extension because I didn't like all these red doji sticks.

Monthly chart identifies pivot points.

When I checked back on HOKU later in the day, I noticed it had taken out the morning swing high on big volume. I realized it was going to make its way to the next level PP. I waited patiently as it consolidated and decided to re-enter on a dummy B&B. By the end of the day, HOKU came within pennies of tagging the upper PP.

As Bigfish noted in the NVDA comments, there are no shares available to short so this a short squeeze. Keep it on the watchlist as I have a feeling we're not done yet.

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

NVDA gapped up on high volume. On the 5 minute timeframe it carved out a higher low and set up a nice base and break pattern. I took a low risk long and was prepared to bail if it could not break the ORH given the weak market open. My worries were unwarranted as you can see from the 15 minute timeframe, it did a vertical move, exceeding the 75% Fibonacci extension of the previous day low to the ORH.

I took a partial and moved my stop just below the first consolidation bar. After consolidating for about an hour, it extended up to the 138% Fib. level at which point, I closed my position thinking that was a near top. I was wrong about the top. NVDA, as you know is in blue sky territory, so its hard to know when it will stop.

I'll be back later this evening to look at HOKU, another one I fumbled with (early exit only to get back in later). HOKU is a great example of how to use pivot points from the longer timeframe to help manage the targets.

Mid-day Recap

The mkt opened flat this morning and immediately attempted a continuation of yesterday afternoon's sell-off before trading back to unchanged levels. It saw a quick uptick following the June Philadelphia Fed number (18.0 vs. consensus 8.0), but has since sold-off into mid-day and is currently trading in the middle of this morning's range. Dow is currently -35 to ~13456; Nasdaq is currently +1.5 to ~2601.5; S&P is currently -1 to ~1512. Today's strongest sector is Semis as AMD and NVDA were upgraded pre-market and HOKU is higher after signing a polysilicon supply agreement with Solar-Fabrik. Today's weakest sectors include Restaurants (multiple CAKE downgrades following conference presentation yesterday; BWLD downgrade as well) and REITs... M&A Rumor Review: A slew of takeover rumors have made the rounds today. Among the names circulating are MDTL, TSN, IRF, WPI, FCX and SHO, as well as EDS-for-BE and AMZN-for-NFLX... The Bond mkt has been trading slightly lower today following a slight uptick after the Initial Claims number (+10K to 324K) and almost no reaction to today's other economic data (May Leading Indicators, 0.3% vs. consensus 0.2%, and Philly Fed). The 10-yr is currently -04/32 to 5.149%...

NASDAQ Technical Picture - Bullish Gap Filled

Finally, we broke the three day, narrow trading range. Friday's bullish gap has been wiped out by a bearish engulfing bar, so the bears have the upper hand. Let's see if they follow through.

Companies moving in after hours trading in reaction to earnings: Trading Up: WSCI +11.7%... Trading Down: SONC -3.9%... Companies moving in reaction to news: Trading Up: HOKU +14.8% (Coand Solar-Fabrik Subsidiaries sign polysilicon supply agreement, announces plans for solar strategy); BDCO +12.3% (subsidiary enters into new pipeline transportation agreement); PANC +12.9% (announces substantial antiviral response in bevirimat 250 mg cohort, data support further dose escalation in phase 2b study); ANDE +9.5% (raises 2007 EPS guidance above consensus); CPST +4.7% (announces new distributor agreement for the United Kingdom & the Republic of Ireland); NPO +2.2% (acquires Canadian compressor business); WYE +2.0% (New WHI data show that women aged 50-59 taking oral estrogen therapy had reduced levels of coronary artery calcification); CDR+1.3% (appoints Lawrence Kreider, Jr. as Chief Financial Officer); WWE +1.2% (signs deals in Poland, Serbia, Greece and Turkey); GBTB +1.1% (announces share repurchase program of up to $10 mln of the Co's outstanding common stock).

Economic Calendar: Initial claims at 8:30; Leading Indicators at 10:00; and Philadelphia Fed at noon.

Pivot Point Trade - Network Appliance, Inc. (Public, NASDAQ:NTAP)

Click on chart to enlarge

Dummy Gapper Trade of the Day - Matrix Service Company (Public, NASDAQ:MTRX)

As mentioned in the briefing list, MTRX was gapping down on weak guidance. I had my eye on it in pre-market as it cratered from yesterday's all time closing high. Shortly after the open it started trading in a very narrow range and I decided to place a sell stop order on a break of the $25.90. As you can see from the 3 min. timeframe, it fell very nicely and came within 15 cents of the 38% extension. I was stopped out for a gain of 1+ pts.

JCOM gapped up on momentum from yesterday's late day rally. It retraced and then carved out a NRB on support of the rising 5 period ema and I entered a dummy long on a break of the third bar high. It went up towards the 25% extension and started to consolidate again, so I was on guard for a potential reversal. It eventually took out the 25 % extension and I booked a partial profit. More sideways action through lunch and finally a doji star alerted me that it would not likely meet the 38% target, so I tightened the stop.

Late Postings Tonight

Finally, a wider trading range for the NAZ. I will posts charts later this evening.

NASDAQ Technical Picture - Groundhog Day

Excluding the gap down on the open, today was the same as yesterday. Until we break the narrow trading range, good setups are hard to find.

Companies moving in after hours trading in reaction to earnings: Trading Up: IHS +7.2%; CLC +5.0%... Trading Down: FSII -9.5%; DRI -4.6%; LZB -1.0%... Companies moving in reaction to news: Trading Up: AVRX +7.6% (announces positive interim results for AVN944 Phase I trial); HD +5.4% (confirms agreement to sell HD Supply to private equity group for $10.3 bln and $22.5 bln increase in share repurchase authorization); FRPT +4.7% (announces $221.7 mln contract -- DJ); FTEK +1.1% (and ITOCHU announce teaming agreement to pursue FUEL CHEM opportunities in China)... Trading Down: BW -9.2% (lowers Q2 EPS guidance; lowers FY07 EPS guidance); PRW -4.9% (enters into definitive agreements for a $2.7 mln financing); AFN -3.2% (announces a public offering of 8 mln shares of its common stock); OVEN -2.5% (announces it will need to restate historical financial statements to recognize material non-cash charges for stock-based compensation); ATSI -1.8% (Y07 revs guidance above consensus; issues Y08 revs guidance; co to acquire CryoCath Technologies' Surgical Cryoablation Business).

Econ. Calendar: Crude inventories tomorrow at 10:30.

Intraday Pivot Point Trading - Riverbed Technology, Inc. (NASDAQ:RVBD)

Look for stocks that are trending up or down. For longs, when price carves out a NRB on PP support with convergence of 5/20 MAs, look for a low risk entry. If price stalls at the next PP level, start booking some profit and move stop to breakeven.

For shorts, looks for stocks that cannot close above the downsloping 20 MA and then find your NRB.

Dummy Watch List Trades - TBS International Limited (Public, NASDAQ:TBSI), and Transaction Systems Arch. (Public, NASDAQ:TSAI)

The market gapped lower on the open and both TBSI and TSAI held their 50 SMAs on early weakness. After recapturing its 20 and 5 emas, TBSI carved out a NR7 bar and setup a low risk long. It ascended steadily towards its B&B resistance line (blue line). Notice how it consolidated briefly at the blue line before breaking out.

I hesitated a bit with TSAI, and waited for price to consolidate before entering long. Again, it paused at the blue line before breaking out. TSAI was a little choppier so I took a partial.

Pre-Market - Tuesday June 19th

Gapping down on weak earnings/guidance: MCHP -7.2%, BBY -3.5% (CC -3.2%, RSH -2.2% down in sympathy with BBY, but on light volume), LEG -1.6%... Other news: ALTH -15.3% (Phase 3 Enrich study of Efaproxyn fails to meet primary endpoint of improvement in overall survival), IMMR -4.5% (Microsoft files suit against co), VOD -1.8% (T CEO said co is not considering an offer for VOD, according to FT), WYNN -1.7% (downgraded to Equal Weight at Morgan Stanley), CSG -1.1% (Reuters reports co will cut jobs as drinks sale nears).

Gapping up on strong earnings/guidance: LNET +4.1%, FDS +3.0%... M&A: CLRK +12.1% (to be acquired by PHG for $34 per share)... Other news: EXPE +16.3% (announces co will repurchase up to $3.5 bln of its common stock in tender offer), EPIX +13.0% (FDA indicated that further clinical trials may not be necessary to gain approval for Vasovist), ZGEN +8.2% (establishes global collaboration with Bayer HealthCare for development and commercialization of recombinant human thrombin), HRS +3.9% (awarded $2.74 bln Navy contract, according to DoD), TASR +3.8% (announces foreign order totaling 1,375 TASER X26 devices), NUVO +3.0% (announces publication of Phase 2 rNAPc2 study results in Journal of American College of Cardiology), YHOO +1.7% (announced resignation of CEO Terry Semel).

Watchlist - ESRX, IFIN, FWLT, TBSI, TTEK, TSAI, CROX

Watch list stocks that could break (or not) anytime - base and break patterns. CROX has a rounded top and looks very weak here.