Cup & Handle - Myriad Genetics, Inc. (Public, NASDAQ:MYGN)

MYGN gapped open and sprinted higher. The gap and early thrust consolidate over time with several inside bars. Volume contracts as the handle forms just prior to expansion. Partial after 3 WRBs and exit when price gives up the 50% FE of the ORL to the base.

JPM and WFC gapped up and chopped around the upper retracement zone of the PDH/L. After carving out lower highs, they submitted to the sellers.

SOHU - 2 IBs before continuing pullback to the retracement zone of March 19th gap day trading range.

Cup & Handle - CME Group Inc. (Public, NASDAQ:CME)

The bears failed to capitalize on early weakness and I got stuck on the wrong side of the trade in SU for a small loss. SU printed two shooting stars at the base of the R-zone of the RH to RL. They were quickly offset by hammers and I lowered my stop.

Similar action on CNQ except I managed to salvage the trade, and get in on the right side.

UTHR from yesterday's gap scan, set up a retracement trade in the R-zone back to PDH.




SOHU caught my eye with a Cup& Handle at the base of the retracement zone of the PDH to ORL. It was a little slow, so I decided to take half off at R1. It stalled at the 50% Fib extension of the low of the cup to the base, so I exit. Normally, for chart patterns we target a full measured move of 100%, but these usually break fast and wide. If they're slow, we have to manage them accordingly.

CME was ripping on my Trade-ideas scanner in the morning, but I didn't want to chase. Finally, it paused to consolidate midday. I took a cautious entry on break of the morning reaction high, trading it as a C&H pattern. Took a partial when it gave back the 50% Fib. ext. level and tightened stop on balance to 38%. Sweet!

Range Trading

The first chart is X and it was one of the weakest WL stocks Friday, setting up a short when it couldn't hold the R-zone of the PDL to ORH as support.

Today X printed an IB in the upper shadow of the OB, green on green, for a target trade back up to Friday's high. It then carved out a tower top reversal pattern for a short back to the R-zone.

SU and CNQ set up shorting opps on Friday after Thursday's big rally. I was hoping to go from top of channel to lower channel, but prices stalled.

Today they opened weak but found support on the lower channel and rallied back to test Friday's highs. SU carved out a morning star reversal for a long entry and CNQ IB. After testing Friday's highs, we had shorting opps.

So, we were long SU and CNQ Thursday, short Friday, long and short today - making the same money over and over. Tomorrow, I expect the channel to break.

I added ECA to the short oil list as it extended to the 50% Fib. level of the ORL to PDH.


MS, a long on Friday, should have been shorted on a trendline break, but I missed it. Eventually, it carved out a bear flag for a quick short.

Finally A Rally - Amazon.com, Inc. (Public, NASDAQ:AMZN)

AMZN rallied to the top of the R-Zone , consolidated sideways, printed NRIB (NR7) and rallied all the way back up to the reaction high from last week. I did not change the Fib. placement from yesterday because yesterday was an inside day, so RH and RL are the same going into today's session.

The two weakest stocks on my WL were ABX and AEM. Here I'm placing my fibs from intraday RH and RL. ABX retraces 50% and carves a bearish stick for a short. AEM was less obvious so wait for NRB.
SU gapped above the trend channel and traded sideways, forming a very narrow wedge. It finally broke down for a gap fill.

Reversal in the R-Zone - Apple Inc. (Public, NASDAQ:AAPL)

The first chart is the trend channel of the QQQQ on the 15 minute timeframe. So far, each attempt to rally has failed. Friday's late day bounce was likely to be met with selling as well. How do we know where supply will overwhelm demand? Probably in the R-zone.

Place fibs. from the most recent reaction high (RH) to the most recent reaction low (RL) and wait to see what will happen. If the bounce is real, price will move into the R-Zone, consolidate then move higher. Candlestick patterns in the R-zone are our guide. If the R-zone acts as resistance we'll see red reversal sticks followed by a move lower. If prices consolidate in the R-zone, we want to see more sideways action.

This strategy worked fairly well with stocks trading with the market. I reviewed my WL last night, drew in the Fibs. and set alerts within the R-zone. AAPL set up perfectly.

CELG opened lower but thrust to the top of the R-zone and reversed.


WMT is not trading with the market, but I placed the FIBs from the RL to RH and finally it set up with NRIB at the base of the R-zone.

Same principles apply to stocks in an uptrend. As we noted over the weekend, oil was well positioned to BO. This a chart of SU, which held the R-zone as support on the open. A possible trade opp. is identified by the black arrow.


Tomorrow, I'd like to see a run lower for the markets, followed by a reversal. I anticipate the third rally attempt will have legs. However, I'm not saying that it will happen tomorrow. I'm saying that as we descend the wall of worry, we have to be nimble, and catch the opportunity, if and when, it presents itself.

Gapper Retracement Trade - Emergent BioSolutions Inc. (Public, NYSE:EBS)

EBS is a perfect example of a gapper retracement trade. Price spikes higher on the open after trading lower in post market trade on Thursday. It then retraces back to the R-zone, where it carves out a mini C&H, before expanding and retesting the early reaction highs.

FSYS faked me out before setting up for the real extension. I have to pay closer attention to level II when trading unfamiliar stocks. This is a low priced stock with a wide spread. I didn't take that into account when sizing my trade. Anyway, not a big deal because I had plenty of winners.

I traded the same core WL stocks as Thursday - V, IDCC, and POT for some more downside extensions. POT gapped in to the R-zone of the PDH to the PDL, printed a cluster of bearish sticks and voilà. The target on the daily was $65.00 which matched up perfectly with the FE.

Support & Resistance

CAT printed a hanging man at resistance.

V tested resistance at $58.00 in early trade. This was a HCPG pick on Friday - failures lead to fast moves in the opposite direction. My alert was set too high today, so I didn't get into V until the inverse C&H was about to break. But you can see from the chart that today's price action almost mirrors Friday's. So basically, I was able to make the same money twice.

1 minute chart below shows that two bear flags formed along the way so there was opportunity to get in after the initial break.


Last night we said that POT had carved out a nice inverse H&S. I was disappointed that it gapped so wide - into the R-zone. Eventually it printed a series of lower highs, setting up for a gap fade and fill.

ABX - the base from yesterday's inverse H&S held as support for most of the session, but it finally gave way for nice short into the close.

Last night I said price has a memory and the CAT, V and ABX trades prove the point. Remember to set alerts at key support/resistance levels.

And what's up with this Trader Transaction Tax? Sounds like some people are getting carried away, blaming Wall Street and the regular Joe day trader for everything that's gone wrong with the U. S. banking system.

Analyzing the Trades -

A reader submitted the following four trades and asked me to analyze NOC and PHM for possible tips on how to pick good setups from mediocre setups in real time. He trades on the 10 minute timeframe, so all the charts are displayed on the 10 as opposed to the usual 15 min.


The best setup, IMO is the BTU because we have IBs, green on green, in the upper half of the ORH with the PDH holding as support, so I would rate this setup as A+.

The only thing I don't like about ANR, is the entry occurs in the R-zone (retracement zone), which is often a consolidation area. I had ANR and ACI as early leaders (outliers) on my watch list, and I decided to go with ACI (break of ORH at the whole $ level). The entry point is a good distance away from the Fib. extension (R-zone) of the PDL to the ORH . ANR had bigger relative volume, but I thought ACI had a better base and higher chance of running given the distance from the R-zone.

The opening range for NOC is very wide, so I would place my Fibs from the ORL to the ORH and extend from there. Price consolidates in the upper third of the OR and breaks out. The entry is good, but shortly after breaking, price stalls. The doji shooting star is a red flag and I would take some money off when price moves below the low of the SS. The trader in question, tightened the intial stop and was stopped out as depicted in the chart below. If the inital stop plus 2 cents had not been tightened, it would have held as support.

The only thing I could add as a secondary strategy, you might want to take half off after a shooting star and leave the balance with the original stop.

The PHM setup is my least favorite of the four trades. Not only does it execute in the R-zone, but it's also less orderly. However, it does have decidedly more volume on green bars than red, so there's a strong bias towards a continuation long.

If price moves out of the R-zone and immediately reverses back in, it's a red flag - keep it on a tight leash. In this case, PHM carved out a dark cloud cover candle and retraced quite sharply. If you're using intraday pivots, price popped above R2 and couldn't hold it, so time to take some money off to protect capital.

PHM eventually carved out an ascending triangle with a low risk entry and had a nice run.

In summary, I would say that the trader had a good day, despite a 50% stop out rate on the morning trades, the winners both reached the 100% Fib. extensions and the stop outs were managed for minor losses. The only caution I would stress is picking spots away from the R-zone unless the setup is otherwise perfect like ANR.

Related Post: Understanding Fibonacci

Potpourri

The TSX was down today due to technical problems and it threw me off. Whenever, I trade Canadian stocks such as gold, energy, agchem, I like to trade both exchanges. So, when TSX was down I got a little anal and missed the gold trades altogether. I managed to snap out of it in time to catch half of the Agchem play.


POT was a continuation play from yesterday's gap and extension. With a weaker $USD, gold, commodities have a chance to rally. Price rallied into the R-zone, consolidated, and moved out for one last wave. I drew trendlines on all of my 1 minute charts today because prices were extended after yesterday's 5% jump, and I didn't want to overstay the trades.


For many stocks with big moves following yesterday's FOMC, it didn't make sense for me to place my Fibs. over yesterday's trading range, because that would give me unrealistic targets.

The MS chart above, carved out a perfect cup & handle pattern. The normal measured move is 100% from the low of the cup to the base of the handle, however, today it stalled after closing above the R-zone and reversed, so I exited the trade.

Both JOYG and BUCY printed really wide opening ranges and here we used Trader-X guideline #4 for best results. This means you place fibs from ORH to ORL. Price consolidated in the R-zone midday and allowed for a low risk entry back up to the ORH, followed by a small extension.

As you can see from the 1 minute chart of JOYG, after taking a partial, price is far away from the trendline. Under normal market conditions, expect some sort of pullback or consolidation when price moves too far, too fast. This happens either through price or through time, or a combination of both like JOYG, which initially moved sideways (time) and then pulled back towards the trendline (price). BUCY consolidated the move more through time as it managed to hold the ORH EOD.

Continuation Plays -

AGU and POT set up nice continuation plays after yesterday's gap up. I liked AGU because yesterday's daily printed a NRB. Break of PDH (previous day high). Exit after 3 WRBs just about 10 cents away from the Fib. target.

X gapped into the R-zone and consolidated for about 45 minutes before breaking the ORH. X didn't reach the Fib ext. As noted is last night's technical post, the downsloping 50 DMA is a resistance area on the daily.

NASDAQ futures scalping. The blue line base for my long entry was a resistance area midday yesterday. Exit at R1. Shorted a lower high prior to the break of a descending triangle but got stopped out on a breach of the trendline. That turned out to be a head fake and I got back in to finish the job back down to P.