Wednesday, May 20, 2009

Technical Picture - Rally Stalls

Markets gapped up on the open, but the rally came to an abrupt halt a little over an hour into the session as traders realized there was no catalyst to keep going higher. Clearly, the only bullish play was commodities/gold versus a very weak $USD.

As Jim pointed out in the post below, the VIX carved out a tweezer bottom reversal and provided a leading indicator that things were about change. I had 3/4 scratches on my gapper longs (COST, BIIB, TGT). The CNQ oil play was good, but the failed gappers struck a chord and I scoped out a futures short.

Today's SPX shooting star on higher volume foreshadows a change in direction. This is a lower high which implies the bulls are tired. Let's see if the bears can show some muscle here.

Economic calendar - initial claims in pre-market, leading indicators and Philadelphia Fed at 10:00 EST.

Gold, another leading indicator, broke out of a huge base today.

5 minute chart of ES futures trades on either side of FOMC.


Anonymous said...

Nice job in the ES!

Jamie said...

Thanks Jim,

Looks like my second entry lines up with your SKF entry.

diver2anne said...

always so helpful, thank you

Joao Henrique said...

Hey Jamie,

Took my YM trade close where you took yours on ES. Missed first entry on breakdown of a base 2mins. Price snapped back and provided a retest of broken base.

Nice management on that trade... you milked it all. Still using close above 5ema as trailing stop?

Jamie said...

Thanks Joao,

On the base and break setups such as the 2nd entry, you can use a close above the 5 ema as a signal to take some off, but the first trade needs more time because the 20 and 50 are below price at the outset and can act as support.

I like to see all three MAs converge over price at the base. As the trade gets under way, they should spread.

Mr. Cap said...


Just note, my math my be a bit off but...

Zolt - $170MM revenue - 34.4MM shares. $7.4MM in earnings
$.22 a share earnings (huge tax loss carry forward for last five years of losses)
current stock price - $10.48 a share = 47.6 PE

China Carbon (ticker: CHGI)
$27MM revenue - 14MM shares - $5
$.21 a share AFTER TAX earnings
current stock price - $.90 a share = 4.5 PE

As a disclaimer we do own a position in CHGI.