Tuesday, July 21, 2009

Overbought Profit Taking

The advance stalled when the S&P tested it's June peak. The combination of extended technicals and disappointing outlook from CAT's conference call, and the Fed Chair's outlook for a slow recovery, led to a steady but only modest slide into early afternoon trade. However, no follow through developed with the S&P stabilizing near congestion and bouncing into the close allowing the markets to extend their winning streaks (Nasdaq up 10 in a row) and all majors setting new multi-month closing highs). But the SPY carved out a red hanging man and the S&P a green one. Haning man has to be confirmed.

AAPL and SBUX rally on earnings after hours.

The H&S top in POT which I described last night was broken on the open when price gapped and tested Friday's highs. However, sellers fought back. A bull/bear battle ensued. The initial price action was like a yoyo with wide spikes up and down, but the bears had the advantage as measured by lower highs. Eventually, we reached price/volume contraction and a bearish rounded pattern took shape, leading to expansion on the down side.

MOS forming H&S top intraday at $48.00


CNQ was a NRB at base of support.

5 comments:

Jim said...

Nice job Jamie - a fairly tough day IMO.

Jamie said...

Thanks Jim,

I had a narrow focus list and everything just played into my strategy.

anarco said...

I also like the MOS trade and its gap fill from $48 to $45

x said...

Very good trades!

Since your focus seems to be on short term trade, do you still think market analysis at daily level is necessary? How does it affect your trade?

Jamie said...

X

Good question. I do day trade the SPY and QQQQ on a regular basis, so the market analysis helps in that regard. I'm also managing my long term investments and keeping up-to-date with key markets and sectors gives me an edge with swing and position trading.