Wednesday, August 12, 2009

Technical Picture - Bulls Defend Support

Prices opened slightly weak, but the bulls defended support and the early thrust held into the FOMC, at which point the bears came in strong, but not strong enough as you can see from the SPY chart below.

An inverse H&S pattern developed on 1 minute chart and a short squeeze ensued. That didn't last long and the bears pushed prices back down into the close. Still we end the session with a bullish engulfing stick on the daily.

One of my strategies going into the session was long oil/commodities after the run up in the $USD. Luckily, oil didn't have as wide an opening range as most other stocks on my focus list, so I was able to get in for a fast trade.


SOHU and SNDA look compelling as short opps.


8 comments:

Tom T. said...

Hi Jamie - On CNQ I understand that the 58.40 line is based on a support line from price action of two days ago but how did you plot the 57 line - are you just looking for a price that is rough average of the price action of the prior day and also a nice whole dollar amount that may act as resistance or support for the current price action?

Jamie said...

Tom,

I look for support/resistance zones from prior price action. The $56.00 support / $57.00 resistance congestion zone came into play in late July prior to the last rally in oil. Yesterday's opening range observed %57.00 as resistance on the first volley, so I placed a buy stop order at $57.02, ready for a BO on the next test.

LeRoy Gardner said...

Jamie-keep up the great blog. Thanks.

I am curious as to how you screen to come across SOHU and SNDA to begin with? Are these equities you're familiar with or do you have a set of equities you follow in certain sectors?

Thanks again.

Jamie said...

Thanks LeRoy,

I have been watching the Chinese internet sector as some of the names (BIDU, SNDA, NTES) were near the top of the IBD 100 list recently.

thedocument said...

What makes SOHU look like a short op? It seems to be forming a continuation triangle.

Jamie said...

thedocument,

Yeah, that's correct, but for now it appears to have failed to BO, so I'm looking for a target trade back down to the lower side of the triangle (blue line). We'll see what happens from there. You'll notice that the last tag of the upper triangle, carved out a bearish rounded topping formation which usually foreshadows a decline at least short-term.

GD said...

Hi Jamie,

Where are you? I missed your trading lessons. Anyway, have a good vacation if you are. We're looking forward for your great market analysis. Regards.

Jamie said...

Hey GD,

I'm not really on vacation, just taking a short break from blogging. Markets are in the summer doldrums, and I'm finding it a little hard to motivate myself to blog. I'll try to post something tonight or tomorrow.

Cheers!