Saturday, August 27, 2011

HANS - Looking Very Bullish

Chart still looking very good. On friday's dip, there was a great buy back. This formed a bullish hammer candle. I also see a potential bull flag forming. Either way I think this stock heads higher. Little resistance overhead. Weekly, this chart is smokin'. RSI indicating this stock is not yet overbought. Again, I see this stock hitting $95 short term (11%).

SPX - Forming a Base, Defining a Range

Basically everyone that sold week before last got back in. This is bullish and showing that we are forming a solid base. Question is will we continue to trade in a box and sell of next week? Either way, longer term I see a lot of overhead resistance but firm support. We are likely to trade in a box of about 70 point for a while. I'm bullish short term until the Great Bearded One reveals whats up the fed's sleeve next month.

GOLD - Heading Higher But Not For Long

Weekly - After a volatility squeeze and trading outside the upper Bollinger band, it is very over bought and ripe to come back down to earth. GLD has show consistent buy points at the middle Bollinger band on the weekly chart. Look for pull back to at least the $160 range to take a position.

On the daily chart, GLD is showing resistance along the upper Bollinger band. Look to short or exit once this happens again (if it does). The upper band seems to be flattening out which suggests we could be leveling off in volatility and buy action.

Wednesday, August 24, 2011

$HANS - Hansen Softdrinks, Bullish Inverse Head and Shoulders

I'm looking for this stock to pull back and test the neckline then go higher. RSI is not over bought. I see little standing in the way of this stock going much higher (technical target of $95) if the market continues to perform well. If the market does not perform well this stock could still be a great buy at lower price.

Performance over the past year compared to Coke, Pepsi and Dr. Pepper. Hansen's has outperformed its competition by over 64%.

Tuesday, August 23, 2011

$CORN - Bearish Rising Wedge Pattern

CORN has had a good bull run and out performed a lot of stocks recently. This bull run could be coming to end. A rising wedge pattern with confirming decreasing volume is developing. Also a triple top seems to be forming as well. These factors combined seem to indicate that CORN 's pricing is inflated and poised to fall soon. Look to short 2% or so below the bottom wedge line. Look to cover close to the technical target.

Click to enlarge

Sunday, August 21, 2011

NFLX - Netflix Bearish Head and Shoulder Pattern Formation

Netflix could be headed lower as the price action fell below the neckline as well as the 200ma. The gray zone is an area of potential support. I'm looking for the stock to bounce back and fail at the neckline for a short play.

Click to enlarge

Friday, August 19, 2011

Using Support & Resistance Areas

This post is to demonstrate how I use areas of support and resistance to analyze performance.

The term "area" is defined by a trading range across a period of time. Stock prices tend to have 3 phases:
1. Accumulation: the day to day or week to week rise in a price. This action return soaks up supply from the markets.

2. Consolidation: When a stock trades within a tighter defined range causing a compression in volatility.

3. Distrubution: The selling off of stocks and the day to day, week to week decline in price. This returns supply to the market.

The areas of support and resistance are when the same group of people and institutions trade with in a tighter lateral (sideways) range. Think of these areas as zones where either traders want to retain their capital. At support, traders tend to keep what they have. At resistance, traders tend to want to get their money back from losses.

SPY (the ETF that trades the SPX index) I use this chart because it shows buying and selling volume.

Click to enlage
• After the April/May 2010 peak and decline, there was 18 weeks of a choppy difficult to trade market ahead, with an eventual accumulation period breakout in September 2010. This break out had much less overhead resistance to work through to climb higher.

• We are in a much more severe correction period with a lot more supply on the market. The market will likely chop around in a bound range bound area between the underlying support area and overhead resistance before climbing higher (125-110)

• There is a lot more overhead resistance to work though. We need significant good ecomonic data in order to break through this resistance. This is not likely to occur for a while.

IBB (ETF that trades with Biotech stocks)

Note the price action demonstrating these areas of support and resistance.

Click to enlarge

• Underlying support from last year shows a higher volume of traders holding on to their positions not willing to sell off.

• 2 levels of overhead resistance will make it difficult for this ETF to climb higher. This stock could be range bound keeping it under $100 for a while.

I use these areas on a weekly timeframe to demonstrate longer term trends. These tend to be more useful than lines in this case.

Monday, August 8, 2011

Market Meltdown - What's Working?

6% drop in market and yes there are stocks and ETF's that are working nicely:

Summary: Commodities, Precious metal & Government Issue Bonds

TLT - 20 year Treasury ETF

DUG - Oil is not working and is falling rapidly along with the value of the dollar. This ETF shorts oil and gas.

FXF - This ETF trades on the surging value of the swiss franc. The price has risen parabolically and is massively overbought. I would buy this on a rare pullback. (trade idea given to me by my buddy JN)

GLD - Gold has had a majorly awesome run. It is approaching a very overbought level. I anticipate gold to plummet at the first sign of bounce back.

SLV - Silver has been on the comeback trail. Thursday's drop last week and weak performance for next 2 trading days makes this a risky trade. I see a potential bear flag forming. If it falls below the drawn trend line, I'd look for support at the 50ma.

CORN - Showing support at the 50ma. Good haven during troubled times?

Head & Shoulders Pattern Explained

I frequently point out head and shoulder patterns because they can be very predictable.

These links explain the pattern pretty well:

Chart School

Informed Trades (video)

SPX - UPDATE, Technical Support Surpassed


Updated chart from my previous post 4 trading days agoIt's no man's land now. Could we see 1040 on the S&P?

Wednesday, August 3, 2011

GLD, TLT, SLV - What's Working Right Now

Here are some winners that have gone up during this down draft. Bonds and precious metals.

SPX - Bearish Outlook

There is a completing head and shoulders pattern forming on the S&P. Almost a textbook formation. This means a very possible move to the downside for the market in the coming months.

Large economic factors at play:
• Declining GDP
• Drop in manufacturing
• Flat job market
• National Credit rating in question