Technical Picture - SPX Target Reached

Our SPX target - 1344 was reached Friday on positive jobs data. The Fibonacci extension remains in play until it fails. We'll stretch it to encompass any new highs and look for a pullback to the ambush zone. If the extension fails in the ambush zone, we'll look for a deeper pullback - 50% retracement from Feb. high to Dec. low.

In the meantime, I'm monitoring the 15 min SPY chart for any negative divergence of the RSI to new highs. This often foreshadows a pullback. So far, there's nothing to indicate the uptrend is in jeopardy. Gap support held on the first test.

BIIB flagging within a Fib. extension after coiling and ripping out of its base.

Technical Picture - Modest Gains on Higher Volume to End the Month

Markets opened somewhat mixed, with the DOW outperforming on the strength of solid earnings from CAT and MRK, whereas the NASDAQ lagged following disappointing reports from RIMM and MSFT. Still, we managed to close positive across the board on higher volume. Leaders included solars, semis, coal, GLD, MOO, airlines and energy. Biotechs saw profit taking after an extended run.

Some of the companies reporting earnings the week of May 2nd-6th: Monday: ACV, AB, CPO, DISH, SATS, JKS, APC, DVA, DNDN, FMC, FST, HOLX, and NETL Tuesday: ANR, ADM, AVP, BZH, BYD, BPI, CLX, CTSH, INCY, LM, MA, PCS, MYL, OSG, CBS, CEPH, CRL, CMCSA, DENN, GNW, KNXA, MAKO, OPEN, VCLK, WWWW, and AUY. Wednesday: ASCA, AOL, CLH, GRMN, HNT, K, GAS, NUS, OIIM, PCG, SLGN, BEBE, CMO, CECO, CLWR, ERTS, GG, GDP, IPI, LEAP, PRU, SMSI, TSLA, and WFMI. Thursday: CVC, CBOE, DTV, RAIL, GM, MINI, MNTA, OWW, PXP, RDN, SHOO, TBL, THS, VNDA, VC, WNR, JOBS, NILE, CQB, DEPO, FLR, HANS, KOG, JCOM, KFT, LLNW, PWER, PCLN, RNWK, V, WBMD, and WMGI. Friday: CAS, DSX, ZEUS, PNM, UPL, WTW, and WCG.

The $USD is in a free fall versus GLD and SLV which are parabolic. We should get a technical oversold bounce in the $USD any day now. This is not likely a bottom because there's no positive divergence to indicate an imminent reversal.


By the same token, GLD is due for an overbought technical correction, similar to what we saw in SLV early last week.


Last week's correction in SLV provides us a preliminary support level.

Coal is breaking out of a tight congestion area.

Day Trades

OXY - HCPG pick - favorable earnings was the catalyst for this high volume extension. I waited for a NRB before jumping in.

DRIV - A narrow range coil triggers the short entry. Came within 5 cents of a stop out, but by EOD, my target was reached.


RIMM was a gap down on earnings warning. After the opening range, price couldn't move beyond the 50% Fib. retracement level and eventually broke the trendline for a low risk short.

I covered half when I saw some real size on the bid side at the $48.50 level.


AMRN printed NR7 on Friday. Watch for price expansion.

Technical Picture - Small Caps Lead as Markets Extend Rally

Small caps recently corrected to 50 SMA. Friday they provided leadership. As noted on Thursday, the situation in Egypt would affect trade. After testing and holding support, the markets retested resistance and rallied on news that the Egyptian President had stepped down.

On the Emini futures chart above we see that the uptrend continues after two tests of the trendline on Thursday and Friday.

On the SPX chart above we see that our measured move target was met on Friday. I've adjusted the pivots to take into account Thursday's dip. The new target would bring us to the 1342 level.

JDSU - huge volume on this extension. Keep on the WL. Shallow pullbacks are good buying opps.

I missed the early run, but managed to catch the last leg up on Friday as JDSU consolidated a printed NR7.

TUP was on our focus list. Price gapped and retested the base, so I entered long. Choppy until it formed a handle and extended higher. Hard to move the initial stop until the handle broke.

GMCR, another runner, flagged for a low risk entry point.

CELL - I felt that I had traded this one badly, but I think it was just a failed BO. Best not to trade small caps on 15 min. timeframe.

ISRG was a HCPG pick and it worked perfectly. For momentum stocks, I recommend using weekly pivots as opposed to daily pivots, to avoid folding too soon.

Add to Momentum WL - ARMH - bull flag

RL - Coiling after huge earnings beat.

Other earnings gaps on WL include AKAM, BWLD DIS, OTEX ATML.

Scanning for Momentum Day Trades

Scanning for momentum stocks intraday can provide low risk trading opportunities in addition to the usual suspects from the focus lists.

The scan I use is very simple to create and provides a short list of momo names.

I look for stocks priced > $10.00, with average daily volume > 500,000 shares. Today's price is > than yesterday's high by 1.005. Today's volume is tracking 1.5 times average. RSI > 60.

Today's scan produced a longer list than yesterday given the market rally.

The stocks I focused on were MTW, TUP, and FMCN as depicted below.

MTW was a wide gap to new multi-month highs. On the 15 minute chart below, we can see that volume is tracking far above average, hence the momentum play. Wide gaps generally need time to consolidate the gap before moving higher. We wait for price and the rising 5 period EMA to come together. If the 5 ema holds as support, we can plan for price extension.

Confirm the setup on the 5 minute timeframe. MTW looks good as price hold above 20 ema.

Price/volume contraction (coiling) precedes expansion, so we plan an entry on a break of the base. Took a partial at the next $ level.

TUP, another big volume gapper, did not hold the 5 period EMA on the 15 minute timeframe, but it did form a narrow base just below first level support at the cusp of $52.00. Here again, we see price/volume contraction ahead of expansion.

FMCN found support from rising 5 period EMA on 15 minute timeframe. I was looking for price to expand and retest the ORH. It started out nicely, but suddenly retraced back to the entry point. The bounce off of support was weak. I bailed when it couldn't hold $27.00.

Technical Picture - Markets Mixed

The markets gapped down on European debt concerns and made a fast move lower. The Nasdaq and S&P held above support of Friday's lows, while the DOW breached but held 20 EMA. Selling subsided after the first half hour and it was a slow grind after that, with tech and small caps outperforming.

The S&P carved out an inside day, another hanging man, in addition to the two from last week. Momentum has slowed, but supports are holding and the bulls have been persistent in owning close, so the bulls still have the edge. The rounded topping formation over the last week, however, is bearish looking. Rounded tops imply too much supply. Cautious trading as we await the inevitable correction.

HLS was spotted on the Esignal hot list. I placed the Fib. extension tool from PDC to early swing high and back down to retracement low. A very low risk entry at the base. Took a partial near 62% FE and let the rest run to full extension.

Above average volume indicates momentum. Price/volume contraction ahead of expansion gives us confidence in the setup.

AAPL was also a low risk entry after about 45 minutes of coiling.

SPRD was tweeted by GTOTOY and I followed at the next consolidation level - carved out nice handle.

Technical Picture - Consolidation Ahead of Jobs Data

The S&P has spent most of the week in a tight consolidation trading range in the upper half of Monday's gap day. After weaker than expected initial claims data, stocks spent most of the session playing defense. A late day surge filled the gap.

Tomorrow's jobs data will set the tone.

$CAD broke out of symmetrical triangle. $USD is still trending lower, but has paused at the 200 SMA. A strong job report tomorrow would really help the $USD.

Ag/Chem sector should pause anytime now to work off the overbought posture. Long term, the sector has more upside.

AAPL is in a tight trading range, printing narrow range bars - coiling. The BO, when it occurs will be explosive.

Technical Picture - Buying on the Dip

Bulls defended support off of a weak open leading into gap fill. Limited downside following the gap fill as prices coiled and contracted leading to expansion midday. We may attempt to fill Monday's gap before OPEX.

Crude has formed a solid base if the dollar rolls over here.

The SPY is a perfect example of coiling - NRIBs (NR7) leading to expansion. Burn the chart to memory on multiple timeframes.

TGT formed a C&H but didn't deliver the full measured move. Daily chart looks good if we can consolidate the earnings gap and try again.

Profit Taking - Potash Corp./Saskatchewan (USA) (Public, NYSE:POT)

POT took out PDH and extended 50%, printed a big hanging man, retested the highs but couldn't push through R2. The second hanging man, strategically placed at R2, provided a very good clue that POT was going to come into some profit taking.

SCO and BIIB were from the gapper focus list. BIIB was a coil and move back to ORH, followed by a long, almost painful, wait for the anticipated C&H to develop.

SCO was an ORBO with extension following the gap fill consolidation.

SLB, also from the gapper list, was a good intention for a H&S BO, but I missed the entry. Hope you got involved.

The key criteria for H&S tops are big volume on LS and Head and relatively little volume on the RS. SLB meets the criteria and delivers a fast trade - gap fill and perfect measured move - 100%