Wednesday, September 23, 2009

Technical Picture - Sell the News - FOMC Policy

The FOMC finally came out with a more optimistic statement regarding the recovery "economic activity has picked up following its severe downturn", but market participants reacted by selling the news.

The daily SPY chart signals that despite numerous attempts, we can't close above the Lehman gap open. Bearish gaps act as resistance and this one is typical thus far. Today's close is the first close below the daily 5 EMA since early September. The post FOMC sell-off was decisive, so expect that correction I've been anticipating to start now.

The weak dollar has been the major catalyst behind the last leg of the rally. The chart above and below foreshadow a pullback. The dollar looks like it wants to bounce here.

If the $USD bounces, oil will fall out of the box.


Textbook shooting star reversal on the SPY post FOMC. Notice how it retested last week's high, carved out a shooting star and swooned on accelerating volume. Sweet!

RIMM was an ambush setup following early strength (TI momentum scan).

RIMM reports earnings after the bell tomorrow. These are highly anticipated since it broke out of a symmetrical continuation triangle earlier this month. However, the BO volume is lame.

RIMM needs a big beat to justify current price. A big beat will likely complete the gap fill, however, just meeting the expectation will result in a failed pattern.

9 comments:

Jim said...

Hey Jamie,

The accelerating downside volume coming into the SPY is exciting. "Summer trade" may official be over - we could/should see a good pickup in volatility near term. I had nice hits both long & short on my RT scans today.

Jamie said...

Jim,

Agree - VIX shed 3 pts. over last 3 sessions and made a decisive bottom after FOMC.

TI momentum scan had far fewer names today but some big winners like PWRD. I hesitated on that one and decided to stick with the usual suspect - RIMM.

Stewie said...

nice charts jamie as always. $USD chart pattern you highlighted is also identical to the one on the VIX. feel like a correction gonna start soon. It won't be obvious i'd imagine. bulls won't give up the wheel easily.

Jamie said...

Hey Stewie,

Yeah, the bears have been lame throughout this rally. They need to show some muscle now. Third test of the trendline will determine if rally continues or fades.

john said...

Your post suggested that readers watch for dollar strength/oil breakdown, mkt breakdown, RIMM disappointment.

Home run Jamie.

WikkiBobby said...

Hey Jamie,

I just signed up for Trade-Ideas, but the Momentum Scan link in this post just takes me to a page to create an account. Would you be able to provide me the link to the Scan?

Thanks in advance.

-Bobby

Jamie said...

Thanks John,

The long awaited correction has finally arrived.

Jamie said...

Bobby,

Here is the link to my TI momentum scan settings

WikkiBobby said...

Much appreciated. Wanted to let you know that I've learned a great deal from your blog as well. Keep up the great work!

-Bobby