Wednesday, October 27, 2010

Technical Picture - Solid Recovery from Intraday Lows

Markets gapped down on the open amid concerns over Euro debt issues, $USD upticks, and weaker durable orders x-transports (-0.8% vs. consensus +0.2%). The SPY held near last Thursday's lows. As we can see from the 5 minute chart below, the SPY printed a lower low in early afternoon with positive divergence of the RSI, which triggered a long. The dollar index pulled back during the afternoon after stalling just shy of its Oct high, prompting the rebound in equities to take hold. The Nasdaq outperformed the broader markets with strength in Semi (SMH +2.2%), Networking (IGN +1.7%), Software (IGV +0.6%) and Biotech (BBH +0.6%) and managed to finish green on the day.

FFIV earnings gap. On the daily we reached the 1.27 Fib. level of the recent recovery. Next target is 1.618.

Because the markets were weak, I decided to enter long from support rather than trade it as a BO long as I usually do. Good thing. because it failed about 1 pt. into the move and slipped back under $116.00. Eventually, it established another base for a second long.

LRCX is well on its way to the 1.62% Fib. extension. Over the previous two sessions, it had carved out a base. After the initial thrust and breach, it retraced 50%, allowing for a decent entry. It managed to hold support and eventually retested the highs, scalloping its way higher. When it took out the 1.27% FE, it rallied quickly to the 1.62% level.

RIMM broke out and followed through on huge volume yesterday. Today it consolidated in the upper range of Tuesday's WRB. I'm targeting $58-60.00

ISRG, one of the weaker stocks on my watchlist, set up a nice bear flag after gapping down, with the markets on the open. The solid recovery off of the morning lows, leads me to believe, it has double bottomed near term.

I posted about BIIB before it BO of its daily base. I've had a couple of decent day trades since then, but today I missed the sweetest. I didn't spot it until it was well underway and didn't want to chase.

Which brings me back to CELG and AMGN. They still look good for further upside. AMGN had a little earnings setback, but it's holding support. Add these to the WL.

This is a weekly chart of BRCM. High volume earnings gap on the daily. I think it can go back up to $50.00 as long as the market rally continues.


Ashish said...

Hi Jamie,

What kind of things do you look for in pre-market action for your watchlist stocks?


Jamie said...

Hi Ashish,

If I'm looking to buy a BO of one of my WL stocks, I want to make sure the pre-market price action is close to my buy stop price, otherwise, I'll cancel the order and look to buy on a pullback to support instead. That's the most important thing I look at. I also like to see the pre-market action in leading stocks like AAPL. And I always look at GLD. GLD starts trading very early and I can sometimes get a good feel for a big move in GLD.