CHARTOCITY!

Day Trades Galore.

Triangles of Death

Last week I spotted Death Triangles in AAPL and DE.

Triangle Formations

I've noticed a lot of triangles in charts recently. When a stock breaks out of its triangle, that's when you put on a trade. If a stock breaks out to the upside, like GLD did, it will continue higher. If a stock breaks down, as FLR and PCU have done, it will continue lower.

PCU has been in an uptrend since 2003. It has moved from roughly $10/share to $140/share. Now the stock is at a critical level. It is about to violate its uptrend support line that has been in place for 5 years. This support line currently lies close to $75 - coincidentally this price level corresponds to the pivot high reached in February 2007 and the pivot low reached in August 2007. The party could be over for PCU. Check out the nasty MACD destruction. We may see a short term bounce, but the next few months will be the moment of truth for PCU. The 1-year, daily chart also shows that PCU has broken down below a symmetrical triangle.



FLR has also formed a symmetrical triangle and broken to the downside. It might have a tough time regaining its footing. I think the technical outlook is bearish for now.


GLD, the ETF that tracks the price of Gold, also formed a triangle, but it broke out to the upside. I'm bullish - can't argue with the trend.

Bearish Counterattack

We had some impressive gaps higher this morning, now everyone is taking profits. This has produced a bearish counterattack candle formation on many charts. We'll need an afternoon rally to change the technical picture, otherwise I'd say this bounce is in danger of ceasing.

In other news, our previous leaders, AAPL and FSLR, aren't behaving very well in this market. Other previous leaders, namely POT, MOS, and MON, seem to be acting better. We may be seeing a shift in where new money is going.

These Stocks are on Crack

Today's post features stocks that had explosive moves to the upside in intraday trading. They ate some crack rocks and then went frigin berserk. In this analogy, crack rocks are to volume surge as frigin berzerk is to higher stock price.

I think a big institution, or possibly an insider stepped in and bought about half a million shares of MRVL at around 2PM today. There was a huge spike in volume - in one minute it traded 500,000 shares, the minute before it had traded 50,000.

First Solar, FSLR also had an upside breakout at about the same time, but the volume surge wasn't as impressive as MRVL's. The price action, however, was much better - a 6% surge. Talk about some sweet profits.

Mosaic, MOS, had a breakout about 30 minutes before MRVL and FSLR. Note that the stock was up 12% today.

Market Bounce

I tried to post the following this morning via email, but I forgot to enable email posting in my blog settings, so here it is, 12 hours late:

Here's a rundown of where the major indicies stand. The highs were reached in mid-October, the lows were reached in the last two sessions. We saw a significant bounce yesterday afternoon. I think this bounce will continue for the next few sessions. Resistance awaits us above, however I think we can reach the 50% Fibonocci retracement levels on this swing upwards, and as you can see below, this would be a 5 to 8% move higher from current levels.

DJIA
High: 14,198
Low: 11,635 (-22% from High)
Current: 12,270
50% Fibonocci: 12,916 (+5.2% from Current, or ~600 points)

S&P
High: 1576
Low: 1270 (-24% from High)
Current: 1339
50% Fibonocci: 1420 (+6% from Current)

NASDAQ
High: 2861
Low: 2202 (-30% from High)
Current: 2316
50% Fibonocci: 2510 (+8% from Current)

We are bouncing off of the bottom of the downtrend channel. This downtrend channel has been in effect since the market top in mid October. The charts below show this downtrend channel, and the fibonocci levels I discussed above.

THE GAMEPLAN:
I think you can trade this bounce. Maybe pick up some DIA, SPY, or the Q's. Maybe look at a call spread (buy a call, sell a higher call) on these or on a specific stock. I'm going to sift through my watchlist and try to pick out some good trades (FSLR, POT, FLR, MOS, AAPL, RIO, PCU). If you get long, you may want to sell some covered calls if you have trouble sleeping at night with these trades on. We'll sell into strength as the bounce progresses - this is a trader's market so don't get too comfortable, and manage your risk.

Four Day Trades

Last Friday I spotted some great day trade setups as they were happening. AAPL was consolidating around 164.64, then broke down:
RIMM broke down at around the same time, it was consolidating near 89.90. Notice both the AAPL and RIMM breakdowns had bear traps:
At around the same time, First Solar broke out above $174, shooting up to $180.
Later in the day, First Solar formed a triangle pattern, and broke to the downside:

First Solar isn't quite as liquid as RIMM or AAPL, with roughly a 30 cent spread. It is also more volatile. Despite this, I think it could be a good day trade candidate.