RIMM ahead

A cup w. handle pattern formed in RIMM since the beginning of the year (though we can argue that this cup and handle extends back to September '09). Recently, it seemed to have found support at a previous resistance pivot around $68. The breakout point of the rim, is around $72 while a measured move has potential for a gap fill left from a previous earnings disappointment back in September.

20-day

The SPY, DIA, & Q's all gaped down today right on top of their 20-day Moving Average, while the IWM found support on top of it's 50-day.So, it's back inside the channel we go.

2B Phoenix

While the SPY was leading in the markets yesterday at it's highs, the DIA was leading on the way down this morning. Right around noon prices in the DIA began to break down and make new lows, meanwhile the Q's, SPY, and IWM were all trading off their lows.Here's a link to the 2B bullish reversal setup.

Aside from the non-confirmation of index lower lows, price also displayed some momentum divergences at this point, followed by a classic bottoming setup known as a "Phoenix" (see the link provided).
Price never looked back after gaping away from this setup, and though it may appear lucky that the market rallied as strongly as it did today, perhaps the breadth divergences were cluing us in? The Advancing/Declining issues were trending up, while the Up/Down volume was still working lower.

Intra-day Double top

As the SPY was trading near the Highs of the day the IWM, DIA, and Q's were all lagging. Price tested just beyond the intra-day high before selling away from resistance (similar to a 2-B top, but we didn't get a close above the previous high), giving us a double top
The fact that there was a previous level of support (from Friday and Monday), it is preferable to not buy into a breakout move like this. Rather, let price prove itself by breaking out and retesting, then look to enter. There was also the PDH which could have been suspect as a selling level. Also, the high TICK, though high, wasn't as strong as the previous levels earlier in the day.
Essentially, a confluence of reasons to sell this level, and for those who bought, a catalyst for prices to move lower as they sold their long positions.The SPY is certainly drawn to a specific level:

dull flat

Wanted to post these two charts (SPY, ADD/VOLD) from Monday's dull, flat market as a reference.

no news necessary

With the Fed announcement after the close on Thursday I found myself reading various threads on a few web sites, and the consensus seemed to be impending doom for equities come Friday. Well, it sure seemed to start off that way, but perhaps some perspective and ignoring all of the news might have kept you out of some trouble. I'll admit that I didn't take any trades on Friday, the result of a head cold and it being OpEx mixed with the news from Thursday that was sure to make for a tricky day, but I did sit through the session in watch and learn mode.
Allow me to digress:
First of all, I plot Moving Averages on my charts for a reason. That reason being as a determinant of intraday trend direction and strength (and perhaps to a lesser degree for Support/Resistance potential). The length Moving Average you use and whether it's Exponential or Simple is less of a consideration than those points mentioned above. For me, the 20- & 50-EMA works just fine. Now a consideration which goes hand-in-hand with the choice of Moving Averages, is what time frame do you trade? The 15-minute works good enough for me (though I'm finding it a little too "slow" for me these days, but that's neither here nor there). So, take a look at this 15-min chart with 20- & 50-EMA's and you tell me, what's the intraday trend here?
Based on what I just explained, the moving averages are sloping up with some healthy space between the fast and slow average (the more space between the averages the more momentum behind the previous moves). So, even before going into Friday's session we have a clear instance of higher highs and higher lows, telling us the trend (for our traded time frame) is up.
Now, let's go to the open.
Internals started off fairly negative. We had Advancing/Declining issues within a fairly bearish range, while Up/Down volume was below zero, but not in what we should consider a clearly bearish level, more of a neutral-bearish level.The gap down open was nearly filled before selling off, but the most negative TICK reading was quickly faded. The strong extension above and beyond vwap was a no looking back move that happened to occur right within intraday trend support (see the 15-minute chart above).
Towards the early afternoon price began to stall at a level that was reasonable to expect potential resistance.So, depending on what type of trader you choose to be, a possible short setup was taking shape (Head & Shoulders pattern on the trigger chart). So long as you keep in mind that this short setup is a counter-trend trade you have some decisions to make.
- Sit on your hands if you prefer to only trade with the trend
- Be aggressive and go short on a high a TICK reading with a stop at the highs of the day
- Wait for a move to take shape (break of a range) and enter on a pullback
Keeping in mind that this is a counter-trend trade (and that this is a very volatile OpEx session) a clear target (or targets if scaling) should be in mind. What might those targets be?
- VWAP
- Previous day's High (PDH)
- Previous day's Close (PDC)
- Moving Average or Bollinger Band Support
This was a session that rewarded quick profit-taking. The most important concept to take from this as an intraday trader was knowing whether you were going with or against the higher time frame trend. In the early morning you were buying a dip in a prevailing up trend. While in the afternoon you were recognizing weakness at a higher time frame resistance level while the broad markets were showing bearish TICK divergences, and fading breadth (see the $ADD/$VOLD chart above). However, because those weakening breadth internals were still above zero and the higher time frame was bullish, you should have been aware that a counter-trend trade required clear targets and quick profit-taking.
Keep your perspective and ignore the news.

ES

ES has support along the 1093 base.

gap, squeeze, rinse, repeat

hmmm, I wonder where stops were placed today?
the chart below illustrates the triangle breakout in today's SPY, complete with an achieved measured move.
Internals remained bullish today, and started accelerating higher into this breakout move.
As of today's close;
the DIA is 2.85% away from it's January highs,
SPY 3.67% from it's highs
IWM 2.91% from it's highs
Q's 3.84% from it's highs.

HOWEVER, there is THIS to be considered going into tomorrow:
"The Federal Reserve Board on Thursday announced that in light of continued improvement in financial market conditions it had unanimously approved several modifications to the terms of its discount window lending programs."

Here's the after-hours knee-jerk reaction, so far:
Right back down to today's lows. We're left to wonder how much of this reaction will be absorbed going into tomorrow. Should get interesting.

Wednesday 02_17

Another mostly choppy low volume day. The SPY did present a tradeable pattern in the early session after a false breakout (2B Top). One can either be aggressive, and fade the breakout (as everyone was expecting heavy resistance at this 1100 $INX level), or wait for the move to take shape and enter on a pullback and target the previous day's highs (PDH) or the Previous day's Close (PDC).
ADV/DECL issues and UP/DOWN Volume leaned neutral to bullish throughout the day, perking up towards the close.
Curiously, the SPY and UUP traded similarly throughout the day.......which sets the stage for a breakout of one or the other. Should equities break out a test of overhead levels will make or break this recent corrective move.
The SPY has $110.50 overheadIWM could get pretty dramatic if it makes a play for $63.25The Q's have a 61.8% retracement at the $45 level
and the DIA actually broke above it's 50% level and found support on previous resistance ($103)
Which all seems pretty bullish, until you look at the Daily charts and start seeing these gap-up, narrow range dojis and ascending wedges. While the Dollar sits in the upper range of a tight sideways consolidation after strength to the upsideeither one (index or dollar) could have a blow-off moment. Equities could fall from here with a breakout of the dollar and perhaps hesitate at the lows should the dollar come back to test Resistance-2-Support ($24 on UUP).

then and now

With all the excitement of the "top" being possibly in, it's important to realize that we've seen this before, and we need further proof of weakness to make the assumption that sellers are predominant.
Exhibit A:
The percentages were based on an Open basis of the first red bar and a Close basis on the last red bar.
Let's point out similarities and differences of these two moves. -Coming off of the lows in June of '09 price rocketed back to the 38.2% retracement, while more recently price chopped in an inverted roof type pattern before gaping up above it's 38.2%.
-It's interesting that in both instances, price gaped above their 50% Fib. Retracements. The occurrence in July '09 was a strong impulse trending move, while in today's situation price came back for a test of this level.
-There were three specific consolidation levels coming off the lows in July '09; at the 38.2% & 78.6% retracements, and at a previous resistance level going back to June (blue horizontal line).
-So far, price was very resistant at the lows of the previous swing move ($108) and now consolidates under the $111 area that acted as previous resistance going back to January.
It seems apparent that based on price alone, the recent moves up have been in a very apprehensive style.

While there are comparable similarities in price, it is what the Dollar has done, and is doing now, that is most interesting. Take a look at the U.S. Dollar Index where the dates to compare are segmented with vertical dash lines.-Back in June '09 price seemed to have double bottomed off of December '08 lows and formed a bullish flag (coinciding with selling in the S&P's). Psychology being, "a dollar bottom could mean lower prices ahead in equities."
After consolidating in a tight range, price finally failed and broke down, giving us the gaping trend day in equities on July15.
-Most recently we see a similar behavior pattern develop (again, the dash vertical lines span the top to bottom selloff we have recently witnessed in equities). Price broke out of an overhead resistance level, giving impulse to an equity selloff. The Dollar Index currently sits in a consolidation phase that just may determine the direction of our equities path.ALL eyes on UUP!

nothing fancy

A low volume move up to fill the gap (on the SPY) left from Feb. 4th. The initial gap up was faded down to the 50% level (Fibonacci retracements snapped from the previous close to the open). Market internals were bullish all day, no reason to be leaning short:It was a sleeper of a day, but price did display some high probability setups in the form of (1) Price testing/finding support at the Open range high, (2) Resistance becoming Support and (3) a base break leading to a gap fill.

Friday 02_12

This chart (60-min DIA) about sums things up for Friday:
Up, Down, Up, Down, Up;
For starters I'm including the SPY with TICK in two parts from today, showing some nice examples of divergence, Support/Resistance, and signs of price strength on weak TICKs.

Well, we haven't much progressed beyond$108 on the SPY, but we ended the day as a bullish reversal harami candle. If the IWM was any sign for things to come, than a test of $110 could be in the cards. IWM is in the lead to recover lost ground and $61.50-$62 will be a telling test, as it's looking extended off of it's recent lows. If price breaks higher from here and fails at $61.50, we could get some sideways consolidation which could form the handle off of a cup pattern. If THAT'S the case, a measured move would put price back at the highs!...I know, it's impossible, right?While the SPY has a little Ascending Triangle thing going for it, a measured move putting it back to over $111, but $110 might prove formidable.

Dow 10k....again

It's a choppy pivot area...remember October?
Price rallied off of this level 5-times before selling off, only to charge at it again two weeks later, crashing through it like a freight train!
So far, 10k has acted as resistance once and rallied off the level on 3 occasions in as many days.

Qs H&S

Buy a dip into the neckline?

charts

Bonds (TLT as proxy) look quite bearish:Wound pretty tightly (VXX):hmmmm, bull flag (GLD)?Can go either way (UUP):Still a good 150-points before testing the previous swing low (DIA):