Tuesday, September 14, 2010

Technical Picture - Testing Resistance

The markets are somewhat extended given the 8.4% surge from the August lows. We are testing multi-month resistance and consolidation (backing and filling) is constructive. No worries as long as we can hold the 200 DMA on a closing basis.

The semis have participated nicely this week, giving the QQQQs leadership over the SPY.

Gold broke out with volume today, but the profit taking into the close leaves me tentative. I had planned to hold some of my GG day trade overnight, but changed my mind as prices started to swoon with volume into the close.

TLT - Looks like a successful test of support and the trendline.

$USD weakness vs. Euro strength.

PRGO broke out of a multi-month base. Yesterday, I saw it ripping on the Trade-Ideas scanner intraday. Today I had my alert set for a break of PDH. I'm holding half for a swing. Target resistance - upper blue line.


James said...

Hey Jamie,

My question is, say you enter a stock like AMZN or RIMM and it doesn't reach your target (100% or 138% extension or what not), how do you determine if it is reversing on you and its time to get out for a small gain/loss, or it its performing a normal pullback and continues to run to target?

Many times, I thought a stock was doing a pullback when it hasn't reached my target or a resistance area, but instead it continues lower and takes out my stops or new swing lows. I would love some help on that problem. Thank you

Jamie said...

Hey James,

I'd like to help you with that problem, but it is difficult without a real example.

Sometimes price stalls at half and whole $ levels. If it stalls and can't break through after 2-3 attempts, it's probably a good idea to lock in profits. There's too much supply and not enough demand. You can always get back in if price finds support.

Other times these widely held names just follow the market. If the COMP and S&P are selling off, AMZN will follow unless there's a news related story and it's trading on its own volition.