Day Trades from Watchlist - SNDK EXPD

I highlighted the SNDK and EXPD setups in Sunday's post. For SNDK, both of the targeted levels were attained in very short order.

I didn't trade SNDK on Monday or Tuesday because of the large gap. Finally, yesterday I decided to enter on the break of the ORH, otherwise I was going to miss the entire move altogether. As depicted on the 5 minute chart below, SNDK gapped open and held the PDH as support. Enter long on break of ORH. Exit half when the $45.00 target is reached. SNDK consolidated briefly and ripped another half point. The long upper shadow as SNDK tags $45.60 and pulls back, signals the end of the move.

EXPD gapped and sprinted to daily baseline in the OR, signaling that it was finally ready to BO of the daily base. Enter long as price breaks $52.00. I was targeting $53.50 based on long term resistance, but is stalled about 10 cents shy and it was time to get out as the move was very extended.

Add BIDU to the WL. As you can see from the daily chart below, we have a base forming at $109.50. Yesterday's bar is NR7 (price/volume contraction ahead of expansion). Since testing support last week, we have carved out a higher low and BIDU is forming a mini ascending triangle base. Target is daily resistance at $115.00.

The 15 minute chart shows how clean the underlying base is.

Technical Picture - Rally Testing Key Levels of Interest

Another accumulation day after a solid start to earnings season. Price is now testing the downsloping trendline and the 50 SMA.

The S&P has rallied 8.8% already this month from intraday low to high bringing the numerous technical levels of interest into play. Despite the extensive six day surge, however, the market has a catalyst after hours (INTC earnings) for further gains in early trade Wednesday. An initial resistance above is in the 1105/1107 zone with a more important area at 1112/1115 (200 SMA/50% retracement of April-July slide).

Chips stocks should rally back to the top of the recent trading range.


Euro continues to show strength vs. $USD which breached its trendline on closing basis today.

Expecting Gold to breakout on next test of trendline.


AGU - Good example of one of my favorite leading indicators - MACD divergence. Positive divergence of MACD to lower prices foreshadowed a reversal. Price reversed sharply and has come into resistance of 200 SMA. I'd like to see a shallow retracement (38%) for entry of a swing trade long.

APKT forming an ascending triangle.

Technical Picture - Markets Oversold

The charts are broken and the markets are extremely oversold following last Thursday's dive. If prices break above the intraday recovery highs as depicted on the S&P futures chart below, we could get a tradable retracement.

Swing Trader

Swing Trading Rules:

• Look for stocks breaking out of bases or chart patterns on strong volume. Lots of stocks break out of bases and fail, so I want to stress the importance of strong volume on the BO bar. Strong volume means accumulation.
  
• Once the swing trade is underway, we need a follow through day to confirm a high probability of success. Ideally, the follow through day should close in upper half of the day's range with good relative volume. How long after the BO should we expect to see a follow through day? It depends on whether or not there is a wide gap accompanying the BO. A wide gap can take several sessions to consolidate.
  
• Identify a target using Fibonacci extensions. On a measured move basis, price should extend 100% of the depth of the base from low to high. The same goes for chart patterns.
  
• Manage the trade with the 6 day EMA (pastel blue on my charts below). If price breaches the 6DMA on a closing basis, exit the trade, otherwise stay in the trade until price approaches the target. Stops should be set with some wiggle room especially in consolidation zones.
  
• Scope out support/resistance zones including unfilled gaps as areas to take partial profits.
  

APKT, which we discussed back on February 24th, is a great example. The stock broke out of a lengthy base with a wide gap. It consolidated the gap by forming a perfect bull flag pattern. The follow through bar took well over a week - time for the flag to form. Price held the 6DMA on a closing basis throughout the ascent. Exit the trade as price approached the 100% FE of the flag pattern. Shortly after taking out the target, price formed a top and began to retrace.

I was late getting in this one - started buying as price consolidated between two blue line segments


AAPL gapped up on Friday after announcing scheduled launch of the ipad. The follow through day occurred on Tuesday, again with good volume. With separate accounts for swing and day trading, it makes sense to day trade these swing stocks as they propel higher.

RIMM broke out of a multi-month base on Monday following an analyst upgrade (HCPG pick from daily newsletter). Notice how the 100% FE of the base lines up perfectly with the gap fill.

MA was a failed bear flag pattern. Failed patterns usually result in fast moves in the opposite direction. I closed my position on the gap fill, but price is consolidating nicely so I will be ready to get back in.

I missed the GS trade, but it's a good example of a BO out of an ascending triangle. Also the bearish trendline has been broken.



BIDU broke out of a base in January, but failed to follow through and fell back down. A second gap BO in February which I didn't swing, reached full extension in early trade today.

N.B. These charts are from yesterday. I started writing this post last night, but got distracted.

Cup & Handle - Monsanto Company (Public, NYSE:MON)

MON from the HCPG focus list, carved out a C&H pattern. It didn't quite reach full extension. I exit when it it printed a lower high.

MON reports tomorrow before the open. MOS reported today after the close and is slightly lower following a $0.03 earnings miss.

The Agchem space was conspicuous in its underperformance yesterday, but today they rose to the top of the usual suspects list on the open. So I stuck with them in the early going. POT was good for two longs and one short.


GS has been on a tear since HCPG highlighted it as a focus stock out of the base. I thought we were done for now yesterday when it closed at the 62% retracement level of the last leg down.

I couldn't resist buying this ascending triangle for a nice rally into the close.

According to the daily, we are hitting resistance (black line), so expect some consolidation/retracement as traders digest the move.

Dummy Trade of the Day - VMware, Inc. (Public, NYSE:VMW)

I was watching VMW originally as a potential short, but after carving out a higher low, it started to make a compelling long setup especially on the 5 minute time frame below. The choppy looking 15 minute pattern is actually an ascending triangle on the lower time frame.

A second entry was possible after it held the intra-day pivot and rising 20 ema as support, but I missed it. The first PP test resulted in a wide range red hammer (not low risk), but the second test was a smaller more bullish green hammer and a higher low as well.

RIMM gapped lower on the open after another analyst valuation downgrade. After a fast move lower into S2, it retraced back up to the ORL and started offsetting. It did eventually manage to close above the ORL, but couldn't hang on for long. I shorted a semi-triangle pattern which is easier to see on the 5 minute chart below.

It did not play out as planned, and by mid-afternoon, I was anticipating a stop out, but it eventually went my way. The one caveat I had going into the trade was the distance between price and the down sloping 20 period ema on the 15 minute time frame. Ideally these should be closer because we know that this type of trade will be slow until the morning pivot low is taken out. Allowing for a retest is easier with a tighter 20 ema. The point being that, any attempt to retrace back towards the 20 should not put our initial stop in peril.

Watch List Trade of the Day - Cummins Inc. (Public, NYSE:CMI)

I sort my watch list by % change after 10:00 and review the charts of the biggest gainers and losers. Nothing on the losing side caught my eye, but on the gainers side, I really liked CMI and DLTR because they had gapped up and were trading above the previous day's range. I ignored some of the other names like FSLR because it was too extended. CAL was also in the top 10 but retracing the early move so I set it aside.

The first chart is a 5 minute timeframe of CMI. I entered long on a break of the ORH following a bullish green hammer.

The second chart is a 15 min. chart of DLTR with a very bullish ascending triangle pattern at the base of the ORH. I exited DLTR when price stalled just below the 38% Fib. extension of the previous day low to the ORH because the BO was taking place on declining volume and I felt it didn't have legs. When price took out morning resistance I re-entered following a NRB.

Both CMI and DLTR were above R2 when I entered the trades. On the daily, both had NRBs on Thursday, (CMI looks like NR7).



CAL eventually broke out of an ascending triangle pattern and had a nice, quick run up. Notice how it held R2 as support on the retracement and ran up even higher.

Technical Trade - Akamai Technologies, Inc. (Public, NASDAQ:AKAM)

AKAM rallied hard on the open and pulled back sharply. Then it started narrowing its trading range below the $44.00 resistance level on declining volume. It started to look like an ascending triangle so I placed a buy stop order at $44.02. I was filled as AKAM broke its ascending triangle on a volume spike and price quickly moved towards the pivot point resistance level where I took a partial. AKAM tried to break through the pivot four times today. I exited the balance of my position on the third strike.

The 15 minute chart below shows that AKAM has carved out a nice base over the last two sessions. Keep this one on the watchlist as it is oversold and should get a bounce soon.

NASDAQ Technical Picture - End of Day Chart Damage Limited

Despite the 33 point drop from the OR high to the midday lows, the end of day chart damage is limited. The NASDAQ gapped up on the open and minutes later went into a free fall, taking out its trendline and ascending triangle support within the first hour. It almost reached the measured move target of 2490, before abruptly reversing at around 2493 and closing at 2504.5 which is just above the January closing high. Volume for the session was below average. The Fibonacci retracement from the Feb. 12 lows to last Thursday's highs fell somewhere between 38% and 50% at the session lows.

Going forward, I would like to see price regain its base around 2510, before getting optimistic again.

Tomorrow's economic data includes Durable Orders at 8:30, Consumer Confidence, and Existing Home Sales at 10:00.

Technical Trade Setup - Varian Semiconductor (Public, NASDAQ:VSEA)

Long above $49.70 on higher volume. A gap up on the open invalidates the setup and must be traded as a gapper dummy trade.