Monday, June 21, 2010

Technical Picture - Profit Taking

The markets opened on a firmly bullish note this morning on overnight news that the Chinese will allow their currency to appreciate against the $USD, which could potentially provide a boost to U.S. manufacturers/exporters. The DOW doesn't gap, so the doji stick is somewhat misleading. The reason I posted the chart was to show that the DOW tagged it's 50 SMA in early trade, but the S&P and Nasdaq comp (depicted below) did not confirm. This led to a slow, but steady decline as the markets carved out lower highs and lower lows, leading to a swoon in the last two hours of trade.

Overall volume was light, but both the S&P and comp printed bearish engulfing sticks. We may continue to work off the slightly extended bias from the June rebound in the coming days. Use the Fib. retracements as a guide.

As discussed last Thursday minor supports held on the first test. I'm not expecting a big bounce in the $USD here, but any strength will keep the markets on defense for the short-term.

A failed BO in Gold confirmed today by the wide red bar, closing on its lows with an uptick in volume. The initial BO was suspect because of the lack in volume. I had been trading ABX long as depicted below, but each move higher felt somewhat sluggish. Today, when the markets gapped up, gold headed south.

AMZN announced lower prices for its Kindle reader, which led to a price war with another book seller - Barnes & Noble (BKS) which announced plans to cut the prices of its own Nook e-readers.
The threat of a price war, sent both stocks lower, with AMZN closing just shy of its 200 SMA on the daily.
PRGO looks like it wants to break out of this base and attempt a retest of recent highs.


RivTrader said...

I'll watch PRGO tomorrow. Thanks Jamie!

Jamie said...


Keep it on the WL a few days. Once the market settles, we could see PRGO pop.