Tuesday, September 28, 2010

Technical Picture - Rally Stalls at Bearish Gap Resistance

A weak open to start the week, but by midday, the markets were able to find support in the middle of Friday's range and eventually worked their way back up to range tops. The SPY just edged above Friday's range and ran into bearish gap resistance dating back to mid May.

As we can see from the 1 min. timeframe below, price almost tagged $115, and backed off, followed by a lower high, then price breached the afternoon trendline and sold off sharply. Notice the loss of momentum as the price bars stopped printing red for the last two higher highs. Negative divergence of RSI to higher prices foreshadows a reversal.

What's next? Well, we have bullish gap support from Friday's gap open. If that fails, we have partial gap fill support and a full gap fill as mapped out on the chart below.

GOOG carved out a bearish shooting star and needs to retrace and retest.

BIDU is extended, but could go higher as momentum is still strong.

AAPL satlling after breaching upper channel.

AMZN could be stalling just above upper channel.

CRM could be forming a bearish diamond top.

CAT still has room to move higher, possibly to $85 before reaching upper channel line.

No comments: