A generally positive session on the last day of the month/quarter but trade was choppy and confined - inside day. The IB at the base of support could lead to expansion tomorrow. At the moment we look well positioned to bounce technically, but news and economic data will, no doubt factor in.

After Hours Summary: LEH -3.0% (to offer 3 mln shares of convertible preferred stock; Moody's downgrades some Lehman XS Alt-A deals); IBM -1.4% (learns of temporary suspension from new business with U.S. Federal Government); DELL -1.2% (is undertaking a strategic assessment of ownership alternatives for its Dell Financial Services financing activities).

Dummy Retracement Trade - Garmin Ltd. (Public, NASDAQ:GRMN)

The first chart is the daily for GRMN. Key support at $55.00 was tested in early trade. We had a wide opening range and I was waiting for a tradable NRIB, but things were disorganized and choppy so I passed.

As we can see from the 15 min. time frame, GRMN eventually broke down and carved out a tweezer bottom reversal at S2 (red dotted line). This led to an orderly Fib. retracement of 38% from the ORH to the midday swing low, and a retest of the BO point.

Former support at $55.00 now acted as resistance and we had a perfect opportunity to get short with an orderly setup.

On the 5 minute time frame below, GRMN carved out a bearish evening star and I shorted on the next bar, using the doji high as my initial stop. I took a partial on the retest of S2 and covered the balance when price approached $53.00.

After taking out $53.00, price capitulated on a huge volume spike and GRMN printed yet another tweezer bottom, which set up another retracement, so I went long at $53.02 and stayed with it until $54.00.


The rest of my day was frustrating due to scratches and stop outs, but GRMN more than made up for it. Here's an example of one of my frustrating trades:

Gapper Double Play - Apollo Group, Inc. (Public, NASDAQ:APOL)

The first two charts are 15 min. and the third chart is a 1 min. time frame and the last chart is the daily which highlights key support. APOL from the Briefing.com gapper list, opened with a huge earnings gap down. The key takeaways from the first 15 min. chart are that Fib. extensions are often not useful for very wide gaps. Also, the wider the gap, the longer the gap consolidation period, so don't try to get in too early, wait until the down sloping 5 period ema approaches price.

The 2nd 15 minute chart shows how I executed the trade. After breaching the ORL, APOL carved out a tweezer bottom which failed to reverse. Eventually price printed an orderly bear flag pattern comprised of NRIBs. All three bars observed the ORL as resistance on a closing basis. The third bar met the down sloping 5 period ema and closed weak (almost a gravestone doji). I placed a dummy sell stop order a few pennies below the trigger bar and it took a while before the actual execution because price was moving very slowly. The high of the trigger bar is the initial stop ( plus a few pennies).

From the daily chart I had established support at $40.00 followed by $37.50. I took a partial at $40.00 and covered a while later as it appeared to be forming a bullish doji morning star. I entered long just before the star pattern completed itself as depicted on the 1 min. chart below.

Notice the perfect double bottom pattern and also note how the 20 EMA acts as support on the 1 min. time frame.





Related Post: Morningstar Reversal Pattern

NASDAQ Technical Picture - Profit Taking

Extended pullback following yesterday's modest corrective action, with the market closing on its lows. Catalysts included ORCL earnings and GOOG price target cut. Technology outperformed on the downside. Will the bulls be ready to defend this support level (15 min. chart)?

After Hours Summary: BSC -5.2% (Chairman James Cayne discloses sale of 5.6 mln shares at $10.84 on 3/25); APOL -19.0% on earnings/guidance.

Watch List Short - Hansen Natural Corporation (Public, NASDAQ:HANS)

We talked about shorting HANS on Monday. We said we wanted to short HANS on the next test of support at $37.00. HANS tested $37.00 three times before breaking down. The first chart is 1 min. The first test swoons from far away so we do nothing because price will consolidate and we want to hold out for a better setup. The second test holds our number and bounces. The third test carves out a NR which is perfect for a low risk entry. Cover when price fails to hold S2.
Price retraces 62% of the move from the ORH to the morning swing low. It fails to close above the 20 EMA and carves out an inverted hammer. Short as price takes out inverted hammer. Partial at the whole $ number on a huge volume spike which marks the end of the move for now. Still think that this one is going lower.

Gapper - Huron Consulting Group (Public, NASDAQ:HURN)

Wide earnings gap from Briefing.com gapper list. The first chart is the daily and it highlights significant support at $40.00.

The second chart is 15 min. and we can see a perfect bear flag on declining volume which carves out a lower high.

I shorted the bear flag break using the 5 minute to narrow the size of the stop. I liked how the down sloping 20 EMA acted as resistance. Price reversed shortly after taking out the target so I covered the balance.

NASDAQ Technical Picture - Narrow Range Consolidation

A gap down on Wednesday following weak Durables data, cautious comments and estimate cuts in Financial, and a short term overextended technical posture in the wake of the recovery extension. So far the consolidation is narrow range and on lower volume, typical of a bullish consolidation. Financials led the way down and energy/commodities provided strength.

After Hours Summary: ORCL -8.5% on earnings/guidance; CCU +7.4% (Bain Capital and THL Partners sue banks to demand completion of CCU acquisition); RMBS +4.6% (confirms that the co wins coordinated trial against Memory Manufacturers; RMBS was awarded $133.6M in damages)

Gapper Dummy Trade of the Day - Alpha Natural Resources, Inc. (Public, NYSE:ANR)

ANR gapped up on the open and quickly rose to the top of my Watch List in terms of % gain. I missed the open, so by the time I got back, it was already printing some red. As it retraced, I saw an orderly pullback towards the rising 5 period EMA. By orderly I mean small, tight, red candles with no overlapping bodies on declining volume (retracement candles should be smaller than the trend candles otherwise it might be a reversal).

I was watching it on the lower time frames as well. On the 1 min. chart, I look for price to carve out a higher low to indicate that the retracement is over. Then I look for a base. The circles on the chart below mark areas where price pivots and changes direction. This is the base and as soon as I identify a higher low, I prepare to enter if it makes sense on the 15 minute time frame above. I use the previous bar low on the 15 min. as my initial stop.

As you can see everything gelled. Price retraced 50 % of the move from the ORL to the swing high on declining volume. The 5 period ema and price came together at that level.

Today was a down day for the market with most of the WL printing red ink so I wasn't looking for a home run, just a retest of the morning swing high. That target was achieved very quickly. I was hoping for a C&H pattern to develop later on, but that fell through around 2:00.

Dummy Trade of the Day - Hansen Natural Corporation (Public, NASDAQ:HANS)

It was a very choppy session and I noticed several failures and mediocre extensions. My first trade was the best in that it reached 100% Fib extension of the ORL to the base. The first chart of HANS is the 15 min. and you can see 2 IBs, the second of which is NR7 in price only (volume does not contract). That looks like a mini triangle on the 15 min., but on the 5 min. below we see a shallow retracement from the base and nice , low risk setup where all of the MAs converge.


Originally, I thought GRMN would set up a bearish flag on the retest of S2 (red dotted line) as price moved towards the down sloping 5 period EMA. But instead it continued to rally off of its V bottom. Eventually, it paused at the base of the high of 2/15 and I traded it like a C&H pattern. It was very slow to get going, and then after all that, it didn't extend the full 100%.

Related Posts: NRIBs Revisited
Inside Bars

Chart Watch - CELG, HANS

A full extension on the CELG C&H pattern would take out all time highs.

HANS was 2nd last on the NASDAQ 100 today. Feels like the next test of support will fail.

NASDAQ Technical Picture - Bulls Own It

Yesterday, I mentioned that we were just 60 points away from recapturing the 50 DMA, which is a must for a market reversal. Today we recaptured the 50 on a closing basis. Now let's see if we can hang on to it!

The NASDAQ outperformed the DOW and S&P 2:1 with leadership provided by Internet, disk drive and hardware. Lots of stocks that had previously broken lower support, came back strong today - BIDU, NTAP, and SNDK to name a few.

One day does not a trend make, but it was a welcome relief after all those offset bars last week.

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

AAPL gapped up on the open and carved out a bullish green bar. The 2nd bar was almost inside (breach by a few cents). I entered long on a break of the whole $ number $135.00. I used the 5 min. timeframe below to set my stop (red line segment plus a few cents). I booked a partial profit after 3 WRBs on the 15 min.. This lined up nicely with the 62% Fib. extension of the previous day low to the ORH. I tightened the stop below the last WRB and exited the balance as price approached the next round $ number $140.00.

As you can see from the daily timeframe below, AAPL has carved out a bullish rounded base at the gap level. The next step will be a gap fill, but I'd like to see price consolidate before that happens, either with a couple of inside bars or a C&H pattern. But since this is AAPL, I won't be surprised if it just goes straight up.

NASDAQ Technical Picture - Week Ends on Bullish Note

A strong finish to the week, after a near fatal start. I'm feeling cautiously bullish.

Dummy Trade of the Day - Visa Inc. (Public, NYSE:V)

As noted in Wednesday's pre-market post, Visa's IPO was the largest ever, and based on MA's success since its IPO, this stock was worth watching. Yesterday's open was promising and I set an alert just below the base at $60.00. Price quickly rallied into the base and I waited to see if it would consolidate in a narrow range for easy entry. That's exactly what happened and the setup was picture perfect as you can see on both the 5 and 15 min. timeframes. Don't buy after price rallies a great distance to reach the base. Price invariably will consolidate the at the base, either before or after the BO. Give it time to set up a low risk entry, otherwise if you jump in too soon, you'll get stopped out or start doubting yourself.

I placed Fib. extension from the previous day's late day swing low to the base. My target was 100% extension, at which point a booked a partial profit. This level, as it turned out, also equated to our signature BO target of 3 WRBs.

The 4th bar was WR as well and then suddenly it retraced quickly and I was stopped out on the balance. After the sharp retracement, V started printing lower highs and higher lows and eventually carved out another tradable base.


As you can see from the 1 minute timeframe below, $65.00 proved to be formidable resistance and price retraced sharply after the third attempt failed. That marks the pivot point. I'm adding V to my WL and I suspect that $65.00 will be taken out soon.

The key takeaway from the 1 minute chart, is that a strong stock will pull back to the 20 EMA and bounce, and then it will often find support at 50 SMA and bounce. But when both of those fail to hold, it's a fast move lower. If you want to get back in after that, wait for a higher low, or a base to form.

NASDAQ Technical Picture - Profit Taking

We've retraced all of the post FED gains and almost 62% of the surge off of Monday's lows. Oil, gold and commodities in general led the way down. Tomorrow is options expiration which may account for some of the volatility. It's up to the bulls to defend either of these green support lines.

TSX Down 415 Pts. (Ouch) - Gold /Oil Drubbing - Short ABX/CNQ

Late entries on these commodity plays, but better late with some sort of trigger, than miss the whole thing.

ABX - I waited until price closed below S2 (red line). Took a partial as price approached whole $ number. I kept a safe stop above the inside bar following my partial. Eventually, I tightened it above the WR green bar.

I missed the best part of this trade because of that sloppy consolidation following the initial decisive move lower. Then it consolidated midway setting a low risk entry point but I wasn't there at the right time. Jeez, finally I took a chance in the afternoon on a lame setup following an inside red bar.

ESRX, as I mentioned yesterday, is good for C&H patterns. This is an inverted C&H coming off a top. As the handle formed I saw two IBs, the second of which was a hanging man, so I entered early. It didn't move fast and vertical like a regular C&H, but by the EOD, it got the job done. The target was 100% Fib extension from the high of the cup to the base. Move stop after each significant trending stick in the direction of the trade, in this case WR red bars)

Cup & Handle - Express Scripts, Inc. (Public, NASDAQ:ESRX)

ESRX from the WL is good for C&H patterns lately. This is not a perfect C&H because the handle forms above the base of the rim and the volume pattern is not great, but the IB followed by the NRB was too good to pass up.

I took a partial when the third BO bar closed just under the 100% Fib extension from the low of the cup to the base of the handle. I closed the balance as price tagged the blue resistance line.


ESRX did not lose its composure after the Fed rate cut. It was orderly and seemed to be setting up for another move so I stuck with it.

Dummy Trade of the Day - Akamai Technologies, Inc. (Public, NASDAQ:AKAM)

Both of these gappers are from my watch list. I was looking for easy setups given today's news. AKAM gave me a trader friendly base and break in the direction of the trend following Friday's bearish engulfing daily stick. R2 and the 38% Fib. extension of the previous day high to the ORL were in sync for this setup. After consolidating at support (R2), it carved out a bullish base and an inside bar, triggering a long for a full retracement back up to my initial entry level.

ACI was a little more subtle. Initially, it carved out a tweezer bottom at the ORL. The reversal lost momentum and couldn't close above the down sloping 5 period ema. I waited until price traded below the 62% Fib retracement of the ORL to the mid-morning swing high in order to ensure this was not going to form a C&H pattern long. I placed my stop just above the 50% retracement level to give it some room. Partial at R2 and cover balance when price starts to bounce above the round $ number $40.00. Eventually it printed a tweezer bottom reversal with a perfect green hammer, so I entered long.

Price does not fully extend to the 38% Fib. ext. level here because of significant daily support at $40.00.

Cup & Handle - Arch Coal, Inc. (Public, NYSE:ACI)

ACI formed a high quality C&H pattern. On the 15 min. timeframe we see and orderly pattern with 2 IBs on declining volume. On the 5 min. we get a better view of the price and volume contraction as the handle forms.

The base of the handle sets up at P and the whole $ number. The target is a measured move or 100% Fib. extension from the low of the cup to the base. The extension is perfect with lots of volume supporting the move, so I decide to partial out at the target and hold the balance for a bigger move. I tighten my stop below the last WRB on the 5 min. timeframe and exit the balance as price approaches R1.

NASDAQ Technical Picture - Profit Taking after the Surge

Following a morning rally, normal profit taking after the huge surge came into play in the afternoon. We saw a 38% Fib. retracement from Monday's low to the midday high and a weak close. Support at the 50% retracement level.