$USD versus Gold

The first two charts show that the $USD has had thrusty move off the bottom to a resistance zone. The RSI is flirting with 70 so its likely to pause to consolidate or retrace somewhat at this level.



The last three charts show how gold rallied out of an inverse H&S pattern, approaching a full measured move of 100% from the BO point in relatively little time (parabolic move), but stalled , carved out a bearish island reversal pattern, followed by a steep decline back to the accelerated trendline. Price and the accelerated trendline are on the edge of the ambush zone of the last leg up, so this is a possible area for a retracement.

Click on charts to enlarge

Parabolic Move - Suncor Energy Inc. (USA) (Public, NYSE:SU)

Parabolic move - initial run comprises small tight candles which get increasingly wider is price/volume increases. I traded SU and CNQ.

CELG and AMGN momo biotech moves in the morning on an M&A fueled snap back rally. AMGN has now retraced 38% of its recent drubbing.

Sorry for the brevity, but I'm pressed for time.

Parabolic Move - Lehman Brothers Holdings Inc. (Public, NYSE:LEH)

The first chart is the daily which shows a bearish engulfing bar following the FRE/FNM bailout. That was very telling given that most financials were up yesterday.

In this morning's pre-market post, we said that LEH was gapping lower because the investment talks with the South Korean bank were over. That was the biggest story of the morning and LEH was the most active on my TI pre-market scan.

Initially, LEH formed a bullish rounded base on the 1 min. time frame, but quickly turned lower, setting up a low risk short. As you can see from the 1 min. chart, once price broke $11.50, it set off on a parabolic move characterized by tight red candles. As the move progresses, the candles get wider and wider, culminating in capitulation on a huge volume spike.

Following the capitulation, LEH was range bound between $9.00 and $10.50. Eventually, it broke $9.00 on a head fake. Head fakes usually result in fast moves in the opposite direction, so I jumped in long.

I had to leave at 2:00 on personal business, so that was it for me.

Dummy Gapper Trade of the Day - WellCare Health Plans, Inc. (Public, NYSE:WCG)

WCG gapped open and broke out of a C&H pattern on the daily chart below. After taking out the ORH it extended 38% and retraced back to the base of the ORH. The ORH held as support through a lengthy sideways consolidation. Finally, it regained the 5 period ema and carved out 2 NRIB (inside the previous WRB, but 2nd inside bar is not inside the first). The price/volume contraction set off a parabolic move (easier to see on 5 minute time frame).

I'm going to follow-up on this one to see if we get 100% fib ext. on the daily C&H pattern.

VCLK, another gapper from the Briefing list, set up a C&H pattern and extended 100% from the low of the cup to the base of the handle.

Low Volatility Breakout Leading to Parabolic Move - Canadian Solar Inc. (Public, NASDAQ:CSIQ)

I wrote about the "Low volatility Breakout" back in July 2006. All of the criteria I elaborated back then apply to this trade setup for CSIQ. The only difference is that back then I used a 10 period EMA and now I use the 5 EMA (the 5 comes from Trader-X).

The only other observation I would add now from further experience is that for trending stocks on lower time frames such as this, the first consolidation bar usually holds as support. If it doesn't, it almost always leads to some sort of retracement. The red line segments are areas where I tightened my stop. After the break above resistance, allow for a retest of the BO point.

Parabolic moves usually have sharp reversals, so you want to be ready to take profits quickly. After price failed to hold $27.00 I immediately tightened my stop to $26.50 for a stop out. The ideal entry is at the break of the blue line, but I didn't mind the late entry because the setup met all of the criteria. At the very least, I expected it test resistance. (charts - daily, followed by 15 min, and 5 min.)

Dummy Trade of the Day - Transaction Systems Arch. (Public, NASDAQ:TSAI)

TSAI was a gap fade from last Friday that I found through one of my scans. I liked the way it traded and added to my list of momo stocks. The first chart is the wide range view of the action over the last few days. I noticed that my original entry point from last week was being tagged as support on a daily basis and set an alert so that I could short an eventual failure.

The second chart is the daily timeframe.

The third chart is my dummy short of TSAI on a breach of support. Notice how orderly the trade was - no overlapping candlestick bodies and hardly any wicks. At first the trade was slow and steady, but when price fell below $30.00 things started to really pick up and then the stock just went parabolic. Notice that volume increases in proportion to the size of the candlesticks. At $28.50 the stock capitulated on a huge volume spike. All those people that were still holding after last week's gap down, in the hopes of recovering some of their investment, finally gave in, the pain was just t0o much.