April 19 TA & Intra-day

Wasn’t Friday a great day for technicals and news?  I wrote on Thursday that the market could be due a short term reversal based on a simple break of a medium term ascending trendline.  The break happened, and subsequently the price action formed a double top with negative volume divergence – shortly afterwards, the GS news hit the street and the market nose-dived heavily for most of the day, before finding support back down at the 1185 level.  Often in trading, the technical setup comes slightly before sentiment changing moves.

Annoyingly, every time TOS do a platform update, all of my technical analysis disappears from their charts, so this is a retrospective look at the action and follow through from Fridays session.  I was sure I’d taken a screenshot featuring the days internals, but it seems to have disappeared.  Firstly, a look at the chart I posted on Friday of the 5min futures, with the futures testing the trendline at a key S/R level:

Harbinger

Follow-through

Even if you didn’t scale in starting from the trendline break, you still had the retest-as-resistance, double top scale in, 123 retest at gap failure and drop from major support level, secondary support line failure and a tertiary support level failure.  It is pleasing from a technical point of view that the futures did find support at a logical price level.  At the moment, a sort of rectangular consolidation is forming – if you take in the V bottom, it looks more like an ascending triangle.  My sentiment remains short, with views to find short setups  in the 1190 area.

It was with good fortune that I began scaling out of my long positions on Thursday, with my trades in HOG, OXY and LUK flat with only CTAS remaining from last week.  I have added 3 trades today, with 2 (SHLD & COST) shorts and one scale-in long at SM.  OMC & LUK are catching moves to the longside, I was looking to get in a little cheaper with these.  VMW also coming back into resistance, but the long in SM is a better risk reward trade so I went for that instead.

SHLD offering a good short setup so long as market sells

Pretty standard setup here – with the market looking to sell off a little, SHLD was retesting highs on what has been a low volume drift upwards.  This came onto my radar when it failed its primary trendline, the retest of this at the same time as testing a prior high coincided with a short setup in the futures.  This is a short term trade, the measured move is nearer the $100 level here, but $105 is also an area I’m looking to scale out from.

COST finally offered a low risk entry

I’ve been watching cost for about a week now, waiting for a decent entry to the short side.  I’m short at the top end of this bearish consolidation phase at $59.  This is also in the services sector (over exposure?), however this is a low beta stock with a narrow range so this offers less risk than the SHLD trade.  Targets down at $57.50 here on the bear flag/double top setup.

As I write, I’m already 10 cents off getting stopped out on my SM trade (same day exit).  My overall bias is to the short side, but I took this reduced size long as a hedge trade based on its high RRR.

EOD update:

Market caught a nice bounce off lows, which meant that all 3 entries from this morning were closed.  SM was the most frustrating, a long which was stopped.  Aggresive trailing on SHLD closed 2/3 and then the final 1/3 shortly after.  In the indices, it was the Dow that showed good relative strength today, moving off double bottom support before breaking to new highs after a slight pullback into former triple top resistance.  The nasdaq was the weakest index today, closing short of the prior resistance level.

Dow strength

This chart shows the cleaner setup in the dow with a same-level double bottom before a higher low, breakout and flag test.

LUK, OMC, HNZ, JOE, VALE, AMKR & VMW are the most interesting stocks for tomorrow.  Most of these are breakout retracements, I have a feeling that OMC, LUK and VALE might not offer a prime entry though.  Not seeing a great deal to the short side at the moment, except for NLY.  WFR is also back at $15, a key S/R level.

On a side note, I’m pleased that TOS now offer 180 days of historical intra-day data instead of 20.

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