Nov 062012

ABT looks like something straight out of a book on technical analysis:  First, prices became overbought and an extended move up within this large ascending channel with negative divergences on the MACD and RSI put in place at the recent highs.  After forming a very bearish Evening Doji Star candlestick pattern around the highs (with the doji kissing the top of the channel), prices then made a large gap below the bottom of the channel.  ABT went on to set up in a very clean bear-flag pattern just below the channel and a solid break below that pattern would likely spark the next wave of impulsive selling.  Note how the pattern measurement for the bear-flag lines up nicely with my third target, which I had added before adding the pattern projection. Nothing is 100% in trading but from a charting perspective, it just doesn’t get much better than this.

I will consider ABT an active short at the open tomorrow unless the stock opens above today’s close of 65.04, in which case I will wait for a confirmed break below the flag pattern.  Those targeting T3 might consider a stop not far above the 66.80 area while a stop slightly above the 67.60 area might be more suitable those targeting T4 (my preferred swing target).

Nov 052012

Looks like the time is right to start selling, short-selling that is, the drug stocks.  I already have several biotech stocks listed as active short trades and I believe that several of the major drug manufacturers, aka- Big Pharma, have set up for some potentially nice swing trade opportunities on the short side as well.

Below are the daily and weekly charts for the sector (Major Drug/Pharmaceutical Companies).  As the weekly chart illustrates, this sector is just another one of many that recently broke out to new multi-year highs (bullish) only to have prices sharply reverse back below the breakout level (bearish…aka- bull-trap).  While prices sometimes dip back slightly below the breakout level during a re-test before moving higher, the negative divergence that was put in on this recent failed breakout to new highs significantly increases the odds the the 10-20%+ move in this sector from current levels will be to the downside vs. the upside.

Zooming into the daily chart, we can see that prices recently broke below the bearish rising wedge pattern (which had negative divergences in place on MACD & RSI), made a successful back-test of the wedge pattern and are now sitting just above support (S1).  Once/if the S1 level is taken out, prices should move rather quickly towards T1, likely pause or bounce, and then continue lower to the second target level (T2).

The active short trade MRK is one of the components of this sector and some of the other names that I like are ABT, PFE, and KERX.  There are also several ETF’s that track the sector as well such as PJP, IHE, XPH and PPH that could be used as proxies for shorting the sector for those that prefer the diversity of holdings that ETF’s offer.  I won’t be able to get all those charts up tonight but will try to do so asap tomorrow.

Nov 052012

i have been away from the computer all day and will not be able to make anymore posts until later this evening.  in checking in quickly, i see that PCYC was down big today to hit (and exceed) the first target for a 20.7% gain (from entry to the T1 level at 48.50).  consider booking partial or full profits and/or lowering your stops, depending on your trading plan.  my preferred swing target on this trade is currently T3.  there may be other trades that have hit targets, stops, or triggered entries today but i’ll have to go over the rest of the active trades and setups later this evening.

Nov 022012

As you can see in the updated weekly charts for AAPL, the stock made a technical milestone today, closing for the first time since the early 2009 lows below both it’s primary uptrend line as well as the 40 week ema (which is also the 200 day ema).  Although prices did not close substantially below either level and the stock can still snap back above those key levels next week, I believe this warrants close monitoring due to the significance of AAPL on the overall market.  The first chart below is a longer-term (~10 yrs) view of the weekly chart while the second chart is zoomed in a bit to show how prices did indeed close below both key technical levels as well as pointing out the significance of the 40 week ema for defining the primary trend in the stock.

As of the close today, the AAPL short trade is up 15.2% from the entry price of 679.99 on back on August 27th but still has plenty of downside left before even the first target on the trade (see updated daily chart below).  Please note that I have added another target to the weekly chart, changing T1 from the previous level to match the top of the T2 zone on the daily chart.  The reason that I often list different or additional target on various time frames is to accommodate various trading styles (longer-term swing or trend trades primarily using weekly charts as well as more active swing traders using daily and intraday charts to time their entries & exits).  As of now, I am pretty much split between favoring T1 or T2 on the daily chart but I will continue to share my thoughts on this trade as it progresses.  For those who like to follow AAPL, there is link on the right-hand sidebar of the site called The Big “AAPL” , which lists all posts and charts on the stock starting with the most recent.


Nov 022012

For those receiving the automated emails for new post notifications, please be aware that there is an occasional glitch that occurs when sending multiple images, such as the last post regarding the bearish engulfing candlestick patterns on the QQQ & SPY.  I plan to have the issue resolved asap but until then, if you receive any email notifications with images that don’t match the text of the new post, just click the link to visit the site where you will be able to view the post in it’s entirety with the correct images.

FWIW- The SPY & QQQ both did manage to put in those engulfing candlesticks at the close today.  Looking at the past couple of similar patterns that I circled on the QQQ daily chart in the previous post, both were followed up by a substantial gap down the following day (one on a Friday, the other on a Monday).  Therefore, although I can’t give specific investment advice, I can tell you that I certainly won’t be trying to buy the gap down if we get one on Monday.  On the contrary, I will most likely deploy what little dry powder I have left after adding to my short positions yesterday and today.

Nov 022012

Unless the PPT comes in with a stick save into the close, we are looking at the potential for some nice bearish engulfing candlestick patterns on both the QQQ & SPY.  As you can see from this daily chart of the Q’s, very impulsive selling often follows these patterns.

Nov 022012

I’ve put together a comprehensive video analysis of the S&P 500 index including technical overviews on 22 of the largest components of the sector, similar to my recent $NDX/QQQ top 10 holdings video.  I do have to warn you that at 39 minutes, this is my longest video yet.  Therefore, this is my gift for you insomniacs, masochists and those who are gluttons for punishment.  All kidding aside though, if you don’t want to sit through the entire video you can skip to the sections that you might be interested in.  The video starts with an overview of the $SPX beginning with the monthly charts, weekly chart, then the daily time frame (plus the targets on the SPY daily) and then goes on to cover the following stocks in this order:  XOM, AAPL, MSFT, PG, IBM, GE, JPM, BAC, T, CVX, BRKB, CSCO, KO, PFE, GOOG, INTC, MRK, HPQ, WMT, C, ORCL, PM.

Some of these stocks are active trades on the site while others look like objective trades at current levels as well.  To view the video, click the link below to where it will open in YouTube.  As always, make sure to select the 720p HD playback quality setting and “Large Player” or “Full Screen” size for optimal viewing quality.

CLICK HERE TO VIEW THE S&P 500 Index Analysis Video