nothing to see here

Narrow range whipsaw day today. At least today was a doji and not a bullish engulfing candle (that would have certainly spun my head around). I'm guessing that the fact that today was the last day of July had something to do with the bulls controlling the lows of the day. Considering the U.S. Dollar had a considerably bearish day, I thought that would give the bulls reason to be even more aggressive today.
We gaped down ever so slightly this morning, but quickly returned to the previous day's close, which lent itself to a quick long scalp targeting the previous day's late day consolidation level. The ensuing selling did eventually test Wednesday's highs, where bids were quickly lifted. The rest of the day was a triangular consolidation that broke out to test the highs. Nothing much more than a whipsaw day.
The green horizontal line represents a support level that held nicely throughout the day.Well, the Daily chart doesn't look very strong here does it?I'm just including this hourly chart for the heck of it, the rectangular highlights are just my way of keeping track of sideways consolidation patterns that typically precede breakouts.I was watching RIMM today and as you can see it fiddled around with $77 all day long, the breakdown was imminent at the end of the day and price stop right on top of my support level (to the penny!!).So, tell me, would you buy this chart below?

shooting star

As candlesticks go, I'm a big fan of the shooting star. It's like the bears giving a big middle finger to the bulls, saying come and get it! Anyway, the challenge has been made, we'll have to see what's brought to the table tomorrow. Regardless of what time frame of a chart you're looking at, textbook tape reading tells us that volume can confirm whether we are in a trend or a counter-trend environment. If we are trending we should see volume consistently rising. If we see price rising while volume is dropping off, we suspect we are in a counter-trend move. If you're looking at a 1-minute chart or a daily chart, if you see a big drop in price on large volume, you are likely to see that followed by a retracement higher on lower or declining volume. Well, by the looks of it, I still maintain that this has been the mother of all counter-trend rallies:
The SPY couldn't quite tag $100 today, but it got close. Just before 10a.m. we got a little flag pattern on the 1-min chart to jump aboard this move. I was suspecting a possible target of $100, but we pooped out (technical term) on the 3rd push, unable to find a bid.
The move off of the highs came right down into our lower keltner channel band. I have got to start playing these counter-trend moves. Maybe half a position with a target of at least the mid-line (20EMA) and a tight stop to try playing for the lower channel band. At any rate, we couldn't get anything going later in the day, so we sold off of our base and back down to the opening lows.
I was watching RIMM today with my Support and Resistance levels mentioned previously. $76.93 was the line in the sand for today. It tried breaking out with quite a large move, but was quickly sold off (again, down to the lower keltner channel band!). On two more occasions throughout the day that $77 level was key resistance and we got another nice sell-off into the close.
I look forward to how the bulls respond tomorrow!

Be Prepared

THIS sort of omen is not to be ignored or taken lightly.
With the China market taking it on the chin last night and the U.S. Dollar (and U.S. Treasuries) possibly finding support, we should be more prepared than ever to respond to a blow-off top in the near future.
"Trends end in a climax."

Wed. Chop

We continue to digest previous gains by moving in this tight range (can bode well for the bulls). Not much to say about today. There was a simple momentum buy divergence (which occurred at support on a hammer candle) just before noon, and a late-day trend line break, but once I started getting chopped up in the day's trading I stepped aside.
The green horizontal line on this 5-min chart represents the "Buy envelope" support line for the day. We found support there twice before breaking down. Being that the day's breakdown didn't really sell off, I still feels like all little dips are being bought. We ended the day in the top of the day's range, the daily SPY looks like a flag pattern, the range is tight, and the highs are less than 1% away.
The "Buy/Sell Envelope" Support/Resistance concept I mentioned before I keep track of on a small group of issues, RIMM being one of them. So, today's trade in RIMM was a breakdown on volume at that support level. There wasn't much follow-through and the second test of the lows on higher momentum and heavy volume brought prices back up above support.The daily on RIMM is basing around this long term level of Resistance. The 3/10 is also indicating a possible "First Cross" long entry should we get a tick up in momentum.

Tues. 07_28

We gaped down this morning right on top of our Buy Envelope, before turning around and running for a gap fill. I highlighted the SPY divergences from this morning in a previous post. We got a rounded reversal that left us with a cup w. handle pattern.
While we base at these highs, the dips are being bought and looks like we're not done running higher.
Here's another perspective, showing a consolidating range while we build value at these levels.This fast time frame shows how price sold off in 3-pulses while the reversal also occurred on 3-pushes as well.I found this chart to be interesting (Daily of the SPY). I took away everything from the 3/10 macd except for the slow line (stability of trend line). What we observe is the decreasing momentum with higher prices. We're currently at a resistance level that could be denied or could run higher. We're very extended from the 20EMA but we're running on elation these days.

wait for it

I wanted to highlight a momentum buy divergence that occurred this morning which you'll see all the time when using the 3/10 oscillator (most oscillators really), and which can fake you out if you're not patient when acting in real time.
Looking at the "Hard Right Edge" of the chart, we see a lower low in price combined with a higher low in the momentum reading, giving us a momentum buy divergence. But, based on that, I'm not just going to buy at any given price. I'm going to let price prove the divergence. So, in this particular example, I'm going to wait to see if price will continue to test higher, at or above the $97.50 horizontal line.
This morning price rolled over that momentum divergence. Price then put in a lower low, momentum went lower, but again put in a slightly higher low. At this point we have a hammer candlestick on volume right on top of our keltner channel; A confluence of signals that are telling you that THIS may be the actionable buy divergence.Of course we're not going to be basing our decisions on one time frame though, right? So, if a buy divergence is suspect I'll be looking at a faster chart for entry and/or confirmation.
From the first chart above, my attention was drawn to a divergence, but looking at the one minute chart I was thinking price may go lower because up to that point we only had two impulse pushes down so far, so I was sitting on my hands waiting for price to prove itself higher (above previous support which is now acting resistance), or wash out into a third push down.
Price did end up washing out into a 3rd push lower, completing our momentum buy divergence.

Death and Taxes

My state tax return .... I am owed.

Monday

SPY closed at the highest point of the most recent range. Our momentum indicator is telling us to prepare for possible downside or a blow-off top.On the 5-min chart below I have marked our buy and sell envelope lines. Price hit our sell envelope (over-shot by 2-cents) on a momentum sell divergence and came back within our previous day's closing range.Here's how I marked my 1-min chart of the SPY today. Early morning resistance was the Previous Day's Close. The low of the day was built on an inverse head and shoulders type of buy divergence.That's all I have for the moment. I'm actually pretty drained from a busy weekend preparing for a big move out of state.

strong finish

A narrow-range consolidation day. After such a strong trending move the day before, I was watching the last hour's high and low from Thursday as possible support/resistance. Being that we gaped down, I was looking for a move back to the last hour's low. We got such a move off of a momentum buy divergence and as the slow line in the 3/10 macd was crossing the zero-line I was looking for a "First Cross" Buy entry (highlighted with the ellipse).We ended up basing around that previous day's Last Hour's Low (also Highs of the day), before breaking to the upside, where we closed on the highs of the day/week. On this faster time frame we can see how price continues to test this level as it acts as resistance before claiming support (RbS). Notice the TICK divergences between the 1st and 2nd attempt compared to the 2nd and 3rd attempt.So, we finish the week with strength, but also building divergence (weakening momentum). If we make a push towards S&P1000 next week, especially if it's on momentum that's even weaker yet, we may see some retracement follow.We've built value on this entire climb up (represented by these narrow-range "fat"-bodies).

rally day

An awesome dollar-crumbling-induced rally today means too many setups to include in today's blog post. The SPY was right out of the gate. In case you needed more clues beyond the strong bar with volume above the Previous Day's High, the markets set up all morning with these Resistance becomes Support (RbS) levels.Amazing how far we've come without any significant profit-taking. Today's high was on lower momentum, but one lower momentum reading does not a top make.Next resistance level looks like it could be the psychological 1000 mark for the S&P, which is also right near a 38.2% Fib level.Two matters which could produce a retracement in the near future are the Dollar and Treasurys approaching significant levels of support. Yields were up pretty big today as the Treasury attempts to entice buyers to support our ginormous debt.If the Dollar index breaks down from here we may be on the road to a triple top in the S&P ;)
Just wanted to include this comparison of the S&P and the U.S.Dollar Index on a monthly basis. Keeping in mind the '03 - '07 rally was in large part correlated with the breakdown of our dollar.

testing

We made an attempt at testing previous highs, only to be sold. The good thing is, however, that we're building value at these higher levels, so that we can break out to the upside with conviction/follow-through; when/if this happens is another matter. I can see a test down from here to see if we can put in a higher swing low:This morning's gap-down was quickly bought, and the strategy I mentioned a while back for buying a return to the previous close was in play for a scalp. I've been forgetting to mention this technique, but that's not to say I have scrapped the setup.
These aren't hard and fast rules of course, like waiting for price to get to the exact PDC price. It depends entirely on the way things are moving, if there's a better opportunity to get in while suspecting a play off of this scalping technique than that's what you base your entry on, take this morning for instance; On the 1-min chart the nr7 bar (purple doji) at the end of the tight consolidation flag was a much better risk/reward entry, suspecting a quick move to (and off of) the PDC. As price flagged again at the $95.75 range you can see TICK getting weaker and the lowest close of that range was followed by a sell-off.Something else I wanted to mention was incorporating Buy/Sell Envelopes on some of my charts (select issues I watch with frequency). They're very similar to pivot points, and they're adapted from the Taylor Trading Technique.
This day's Support on the SPY was $94.83; not bad, our LOD was $0.06 higher. Meanwhile, the Resistance for today was $96.13, the exact penny for our HOD. Here's the 5-min SPY, with the Buy & Sell envelope are highlighted in the bright blue horizontal lines (the other three horizontals represent Pivot, R1, & S1).On the chart above, notice the "Slingshot" setup. Price put in a higher low, while the momentum indicator put in a lower low, giving you a buying opportunity that has three criteria; Pivot Support, a Slingshot setup, and a bullish engulfing candle closing right on top of the 20-EMA.

Finally, there was FCX this morning. Price based around the PDC for most of the morning. Towards the break of the base we had 4 narrow range candles, 3 of which were nr7's. I'm keeping a spreadsheet for FCX as well, using this Taylor Trading Technique I mentioned above. The Buy/Sell Envelope for today on FCX are highlighted on the chart below with green and red horizontal lines. Price came withing $0.03 of our resistance level! If there's any desire to know these Buy/Sell Envelope levels, let me know. For now, I'm keeping track of SPY, RIMM, FCX, POT, and XLE.

gold

An inverted Head & Shoulders is a bottoming pattern, so what is it when it's at the top of a range? Well, it can be an inverted roof. This pattern in GLD's (SPDR Gold Trust ETF) weekly chart looks like it can be an inverted roof pattern setting up.
A measured move breakdown from this pattern could bring price back to previous resistance/support at around $68. If it breaks out to the upside a measured move would bring it to a price around $120. Based on how I drew the right-side trendline, price seems to have broken down and retraced on weak momentum, where a breakdown looks possible. I suppose you can re-draw this trendline to include the most recent price data, in which case we're still waiting on a break.

hanging man

Today's late day rally left us with a hanging man on the Daily chart. Whether or not we'll resolve that candlestick pattern to the downside still remains in question. It seems the obvious lately isn't so obvious. It seems all too perfect doesn't it? That we gap up within dimes of our previous highs and print a hanging man, it would be all too perfect to short from here, alas we'll have to let it prove itself out.
This morning's sell-off came to a low right around previous Resistance/Support coinciding with S1. A 3-push momentum divergence built up, forming an inverted Head & Shoulders where we rallied back to R1 (also previous support).

finally a sell short day

We finally put an end to this over-extended rally. Here were some setups
Like the broad market, most things gaped up this morning and looked very over-extended on their Daily charts.
FCX set up a Head and Shoulders pattern, but on these fast, 1-minute, time frames I need a little more confirmation on a chart pattern. As we got to it's opening range lows price spent 5-minutes getting more and more narrow before breaking down for a gap fill, target being the previous day's resistance level (not shown).As the markets were setting up for a break-down FAZ set up a little flag pattern after an impulse move to the highs of the day. I take a $0.50 gain quickly and trail the rest with a tight stop, and I didn't take the base break later in this chart.POT was a breakdown from it's Lows of the day and a gap fill was evident. The breakdown from the LOD came with strong volume as well, target was both the PDC followed by the PDL.

Monday

A gap up, sideways consolidation, followed by a gap-fill. The lows keep getting bought, and these recent lows are barely dipping into the previous day's range.R2 and Thursday's highs provided initial support on our gap-fill, but a break-down found the lows of the day at previous day's resistance (RbS; Resistance becomes Support).
The SPY opening range looked a lot like this short opportunity in FCX this morning. It was frustrating to sit through a half-hour of this back-testing of support before falling lower.I got robbed in PWRD today, robbed!! :)
Price based around $35, forming a cup w. handle pattern. I got in at $34.99, we continued to base, then a single print moved up 0.20, before whipping back down and taking out my stop. It was a tight stop ($0.15), so the loss was minimal, I figure a set-up like this will either accelerate or fail, in which case if it fails there's no need wasting time waiting for price to possibly come back to the base.