Wednesday, March 23, 2011

Technical Picture - Minor Gains

Markets gapped down on chatter regarding European debt and Mideast worries. Weak new home sales data at 10:00 added to the pressure. Prices stabilized shortly thereafter. By afternoon prices trended higher. The NASDAQ and DOW notched new short-term recovery highs, but the SPY didn't confirm. Still, today was the first trend-like day since the recovery began.

GDX (gold miners) forming a symmetrical triangle as it tries to catch up with GLD

GLD forming bullish inverse H&S pattern.

SMH wedging or flagging.

GES bear flagging following last week's earnings/guidance disappointment. Target gap support.

FOSL basing at resistance. Needs to consolidate after three consecutive higher closes.

LNN forming a small handle at base.

LRCX - watching to see what price will do when it fills gap. I suspect we'll rally back to $56.00 before reversing back down.

ITMN basing, looking for higher price.

Day Trades


DW said...

Hi Jamie,

Good trades on GG and SLW. Could you please give some explanation about your entries? The only reason I can see from charts is that both of them break out previous day's range. But there are no base or NRB, and the SPY is falling. A lot of stocks break out previous day's range like them then stalling or reversing. How do you choose good candidates from others?

When you add SLW, it is also on my screen with IBN and NEM. I miss SLW and trade the BO of others. I think they are in the same patterns(consolidate in NR after big move). They are stopped out and do you think I trade them in a wrong way?

Many thanks!

TJ said...

Hi DW,

On the daily charts SLW and GG were trading above all the MAs and had consolidated with two relatively NRBs on the daily timeframe. Metal futures also looked strong going into the session, so I took a chance that we could move towards a retest of daily highs.

What makes one NR consolidation better than another? The key to NR consolidations is finding stocks that base in a tight range at the half and whole $ levels. Big sellers often sit on these levels and once buyers hitting the ask, have exhausted supply, the stocks usually rip. You can monitor the density and size of the sellers by using an ECN (Total View) screen.

Unknown said...

Hi Jamie,

What's the difference between GLD and GDX. Which ETF chart to follow to trade ABX and GG?

TJ said...

Hi A,

GLD is the ETF which tracks the price of gold bullion, whereas, GDX is the ETF that tracks the prices of gold miners such as ABX and GG.