Technical Picture - Technical Rebound In Play

The markets continued the rebound off the 62% retracement which bottomed yesterday. Tech and small caps outperformed the broader markets. I would expect the rebound to slow or stall into OPEX over the next two sessions as pinning comes into play, and as we move towards the down trendline.

Econ. Calendar - Initial Claims in pre-market, followed by existing home sales, Phil. Fed, and leading indicators at 10:00.

IPO - Looking forward to the LinkedIn IPO tomorrow symbol LNKD

Last night I posted the daily chart of ESRX as a bullish base on base pattern. Today it pulled back to its rising 200 SMA on the 15 minute timeframe and found support , as it has over the last few sessions.

An easy, low risk entry presented itself on the 1 min. chart below.



SNDK was a low risk short after price failed at resistance (blue line). The short extended to 1.27 and reversed, setting up a long. Looks like a solid C&H pattern setting up for tomorrow.


RIMM gapped up on an analyst upgrade, which ruined my morning star daily setup. Small scalp trade.


ALTR was very strong out of the gate. I waited for a Fib. retracement rather than chasing early strength. It worked well for a 1.27 FE.

Chart Setups - ESRX, AKAM, RIMM, SINA, SOHU, GOOG

The following charts were posted on Chart.ly.

SINA is a morning star stick reversal pattern with good volume.

SOHU is a bullish engulfing stick on the support zone.

RIMM is a morning star reversal pattern on long-term support with a very oversold RSI.

GOOG is a wide bullish engulfing stick in a key support zone.

ESRX is a base on base continuation setup.

AKAM is a hammer reversal stick on support.

Technical Picture - Modest Gains on Favorable Jobs Report

INDU is testing February highs. I'd like to see a retracement here so that we can carve out an inverse H&S pattern, before attempting to move towards the top of the channel.

Small caps are testing 2007 highs.

The SPY gapped up on the favorable jobs data, but a mid-afternoon swoon brought us back to the base. Black candles can be bearish as they highlight gap fades. I'm interested to see if new money will come into the market as we begin a new month, or if we get some sort of constructive retracment before attempting to make new ground.


My main concern is the NASDAQ which has yet to confirm the price action of the other major US markets. We saw late day selling in AAPL (20% of the QQQ), weakness in a number of cloud names, and the SMH appears to be falling out of bearish rising wedge with volume (see SMH chart below COMPQ). Also, copper, a leading indicator, is printing lower highs. These are red flags. The broader markets can't continue higher if the COMPQ fails to confirm and pulls back.

Watch List Stocks

AAPL looks vulnerable to further selling. Friday's late day sell-off had volume. If it fails to hold the retracement zone as support, it will likely retest the base (blue line).

ALXN is testing $100.00 resistance again. Large scale buying into the close, pushed the stock just above $100.00. I would prefer to go back and fill the gap before breaking out, but ALXN might not wait.

ISRG attempting a big level here. Breaking out on good volume. I'd like to see a few days consolidation (coiling) in the upper shadow of Friday's stick, before moving above $350.00.

RIMM bear flagging, closed near lows on Friday. If the BO closes below next support at $54.60, I'll hold for a swing. There's virtually no support between $54.60 and $50.00 as we had two WRBs on the BO of the base back in October. That's why I find this setup so compelling.

AKAM setting up a mini inverse H&S pattern. Measured move target 100%.

RVBD looks like it might be forming a H&S top.

FFIV - The Fibonacci symmetry on this chart is a thing of beauty. After gapping down on earnings, price retraced to the ambush zone and the downsloping 50 SMA and extended to the Fib 1.27 level. We retraced to Fib 1.0 and now it looks poised to extend further. $80.00 seems like a realistic target, if FFIV fails to hold the 1.27 level.

Day Trades

GES caught my eye on the open because of the gap up. I placed my fibs from the late day handle to the opening swing high and waited to see if it would set up a reversal in the ambush zone. It did, so I took it for a long. My target was the high of the earnings gap down bar on the daily (blue line) on the chart above.

VRUS was a gap continuation play. If we ignore the opening range, we see an orderly base on base setup. My target was $81.00 which represents a full measured move on the daily. (See Thursday's post).

I thought the third test of the support zone on RIMM would finally break, but there some large buyers sitting on support and I took a small loss. Price rallied back towards the 5 day EMA, carved out some bearish looking upper shadows, formed a base and broke back down, so I shorted it.