Sunday, June 13, 2010

Technical Picture - Constructive Market Action

Friday's action was constructive despite the lack of volume. The Nasdaq as depicted below retook the 200SMA. New highs on the NYSE outnumbered new lows 42/12 (Nasdaq 38/36). Several names we like and talked about in the comments were included in the new highs list NTAP, AKAM, NFLX. And the markets closed near the HOD on late day strength despite the lousy retail sales data.

We're not out the woods yet. The markets closed just shy of the 20EMA which was our next level resistance. Even so, we need to see a follow through day with big volume or we need to close above the previous high set on June 4th before the bulls can confirm that the correction is over.

The VIX looks weak. A close below the 62% Fib. retracement level could see price fall back to the base.

Transports testing the down-sloping trendline.

Failed rally attempt in $USD on Friday. Euro index (below) positive divergence of RSI and MACD to lower prices, foreshadows the end of the move.

In addition to NTAP, NFLX, AKAM, my focus list includes CRM, AAPL, PRGO, BIDU, SNDK AMLN, HGSI, APKT, POT, CNQ, CHK, and CLF. On the short side, as mentioned in the comments GS and CSCO. Also watching GLD (Gold ETF) and gold stocks. If GLD retests its highs and fails on the third attempt, I will swing short.

My open swing trades are NTAP (chart below) and POT long. Day trades on Friday - NTAP and AKAM long.


Larry Arndt said...

i just checked comments to find the last time i was here. two days before we bottomed. lol. its been a while.

yep, make it look like a low volume rally to get bears excited and then rally the thing hard as hell through the highs. lol. its funny how all the pattern fragments have been the same for the last 18 months, but all the sequences are different. nowadays the selling likes to stop after a strong break and then we squeeze on nothing until someone picks it up at a higher level and runs with it. it is such a strange upside down market, but just looking at price and quote seems to keep things clear and readable.

volume is tougher to interpret in these irregular times. even if we move higher on strong volume and range and break that swing high on good volume one has to ask themselves if we did that on legit buying or covering, if it is in fact covering then really how much more can we expect?

hey, paper and paper products started to look strong on friday, here are three components of the group that look decent, IP, SON, TIN, same group all (appear) to be breaking out together. how do i tell if the rally is legit or not jamie?

thanks. i'm just an ES trader. I'm finding that end-of-day stocks are a whole different ballgame, any help is appreciated.


Jamie said...


There's no sure thing when it comes to the markets. Price and volume are the best indicators, so if be make a higher high with volume, that's the best we can hope for.

In the near term, if we get confirmation, I suspect we'll be in a trading range testing the 50 and 200 SMA's.

As long as the economic data is more good than bad, I don't see a need for further correction. But markets react to global catalysts, of which there have been many unfavorable lately.

bl said...

Add UFS RKT to the paper list. I noticed 90 of my coal/ore/steel/rails/paper WL reversed at the open. It was amazing. Gap down overnight/reverse rally at the open for 45 min/pullback and consolidate/2:20 rally to the close
No need for gap list just a good beta list or neg story stocks that pop up from time time to time: gs bp mee goog/bidu cvs/wag.

Jamie said...

Thanks BL