Thursday, February 10, 2011

Technical Picture - DOW Ends Win Streak

The markets gapped down on weak earnings (CSCO), ignoring the better than consensus initial claims (383 vs. 410). As we can see from the S&P Emini futures chart above, we filled Monday's bullish gap and reversed back up to fill today's opening gap. BTW, a must read in the morning for a good take on the market is Gtotoy. His outlook this morning was spot on.

The rest of the session was a chop fest as various news items were digested - AAPL disappointing sales through VZ, and the mixed messages from Egypt. As the Egypt story unfolds, it will impact futures and the markets.

The DOW ended its eight day win streak, and the other major markets ended the session just above the unchanged.

The $USD looks poised for more upside.

GLD has filled the bearish gap and now looks like it is forming a bearish wedge. If the situation in Egypt worsens, gold could be in play. There are two factors at play with gold, safe haven in troubled times, and higher interest rates which dampen gold luster. GLD gapped lower on the open because of the good claims data, which in turn led to higher interest rates and lower bond prices. I still think GLD has to go and test the 200 DMA before we get a tradable bounce.

Today's trades were the same usual suspects as yesterday. JDSU, FNSR, and AGU tested short-term range supports on the open and bounced. JDSU sold off in the afternoon and probably needs a rest.

RL is consolidating the earnings gap. I'd like to buy it if it retests short-term range support at $124.00 and bounces.

CELL and TUP are bull flagging. TUP printed NR7 today, so we could get expansion tomorrow. Also, don't forget SWK which is still flagging.

These are not recommendations to buy, sell, hold or sell short. Everyone needs to think for themselves when it comes to trading their own accounts. First, it is the only way to really learn, and secondly,you are the only one responsible for your trading decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. The plan includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios before making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.

Good Trading!


Ken said...

I also think GLD will at least test the 200 dma soon. Zooming out to a look at the past year, and a big rounded top is still in play there as well.


Sasha said...

As always great read - thank you.

Jamie said...


I'll be watching GLD tomorrow. Think it will start to move lower early this week.

Jamie said...