Tuesday, November 30, 2010

Technical Picture - Nasdaq Weakness Weighs on Broader Markets

For the second day in a row, the markets gapped down on fear regarding potential eurozone defaults. The SPY and DIA were able to fill their opening gaps during the course of the session, but the Qs didn't confirm, leaving the door open for weakness into the close.

As we can see from the S&P emini futures chart above, we had a rounded top form on China tightening and now we have a lower high, also with a rounding effect from eurozone debt default and Nth/Sth Korea. Rounded tops are bearish signifying over supply. Every time the bulls try to push higher, they are met with an unending supply of sellers. Hence, the market has no choice but to continue correcting until the supply/demand re-balances.

I shorted NQ futures in to close as depicted below. Covered half after 10 points, and holding overnight or stop 2125.

NASDAQ monthly chart below, ends the month with a spinning top, which usually leads to near-term weakness.

$USD is approaching resistance at 50% retracment level. It's too strong now. Any pause will likely be relatively shallow and short in duration.

The GLD/Euro decoupling is still in play. GLD and Silver mining and retail provided leadership in today's session.

TLT bottomed, formed a base and is now retracing.

OIL looking weak after today's shakeout bar.

Internet sector forming bearish flag. Not surprisingly, we'll continue to see profit taking in this overbought sector. SOHU broke out of bear flag today. GOOG weakness on Groupon deal. Look for BIDU, AMZN, AAPL to follow.

AMZN ready to fall into gap support.

SNDK flagging at resistance.


Other stocks to watch tomorrow FFIV NR7, GMCR failed BO.

Today's trades - Long RIMM ABX on the open in my Canadian account. My TWS platform had issues so these were missed trades in the trading account. Short TTM and NQ futures.

8 comments:

chin said...

Hi Jamie,

The markets are up big time. Dollar is down almost .50
Do you see NASDAQ lagging with all this momentum in the market today ?

Jamie said...

Hi Chin,

It appears as if the risk trade is back on for now. There will be a huge opening gap. Will it be a gap and go or a gap fade? I don't know. Good ADP numbers would imply that we are anticipating good jobs data on Friday, so I'm leaning bullish.

AAPL trading up in pre-market so Nasdaq not lagging so far.

chin said...

thanks Jamie.
I went long on NFLX this morning, only to see it go down after the market opened.
Do you have any thoughts on NFLX. IT has had a huge run in the last few days. The trend seems to be upwards still.

Thanks again for your valuable comments.

Jamie said...

Chin,

NFLX gapped up and based for four days. Yesterday it had extended 1.27% of that gap and base. It is far too extended and way past the optimal buy point.

chin said...

Jamie,

what would be the optimal buy point for this stock ?
Its currently at the 199 level.

Thanks

Jamie said...

The optimal buy point was just above $192.50 - the highs of the three day base. Ideally, you would have locked in some profit at $206.50 when it reached the 1.27% FE.

High volume selling today feels like distribution.

chin said...

thanks much Jamie.
FFIV nr7 was a good one. Do you see any short term resistance on this ? It is bouncing around the upper BB(20).

Thanks

Jamie said...

Chin,

See my email. re. 100% FE on gap & base for FFIV at $139.00. Time to lock some in.