Trader Mike mentioned that it may look like an uneventful day to those who weren't watching the markets today, however, I was gone all day at Traders Expo and even I noticed it was a Wild day. I checked my quotes in the premarket and saw it was ugly it was downright brutal while I was sitting through a Forex class which was the same as the class ;). However, when I checked later that day I saw the S&P actually positive and most stocks well off their lows. I overheard lots of traders this morning talking about going short and talking about how the run was over, and this is what capitulation is all about. All the bulls cave in. So was this the bottom? I think we will know pretty soon, but it appears that it may be so.

On another note, I saw some intersting things at the convention today and I will be back Saturday. Most of the material was basic, but it was cool to meet the writers of some of the books I have read and loved. I will try to post a review on some of what I have seen over the weekend.

Good Luck tomorrow,

DT

There won't be an update tonight as I won't be trading tomorrow. I will be attending the Traders Expo in Ft. Lauderdale. If anyone is interested, you can view some of the seminars via a free webcast here.

The markets are once again threatening to break support and completely collapse. Trade carefully on both sides of the market or just stand aside until this works itself out.

Good Luck,

DT


ps.. Scott, I will post an SMSI chart later this week for you. The short story is that SMSI had a bullish breakout and looks healthy.

As I was driving home last night listening to CNBC i heard four analysts say they were either bearish or waiting for things to clear up and that started getting me feeling a little excited. Looking at the charts below I feel like there is a decent chance the bottom is in for now. I am short on time and I will try to add more commentary later this morning. Here are the charts for now.

UPDATED 8:45am

Take a look at the nasdaq composite chart below. The odds are pretty decent that we are establishing a double bottom. I am looking at candles to confirm support at a previous breakaway gap and near a long term trendline. Add some divirging indicators and the case for bullishness is getting more solid.

Here is the Russell chart showing possible candle confirmation on the previous morning star reversal. What I would be looking for here is another morning star to develop to confirm this area as solid support. Of course, there is a chance we take out these lows and a more bearish stance would be needed.
Here is a good example of how I use candles to confirm support. If you follow the internal trendline shown in the ADS chart by the dotted line, you will see that each time it touches the candle a soji or spinning top candle occurs, followed by a bullish confirmation. This tells me that as the stock is pulling back to the trendline, we get a battle of bulls and bears end undecided about support, followed by bulls overtaking bears the next day. Here we are again with a hammer/spinning top at a trendline. If we get a bullish candle today, I would expect ADS to challenge it's 52week high.
BIDU had a nice breakout yesterday and may be headed to an all time high.
IIP has been consolidatin the previous breakout and appears to be forming a very healthy base. It looks like it is headed to the top of the triangle next.
FE has been consolidating above long time resistance which should serve as good support for a new breakout.

Although I am feeling a bit more bullish, keep in mind that the bottoming out process can get very choppy, and there is no guarantee that we are even bottoming out here. In short, I am looking for the Nasdaq to lead here, and if it continues to lag, then the chance that everything falls apart is more likely.

Good Luck,

DT

Just like that the indices are back near their recent lows. Pay attention to the Nasdaq in particular as they are sitting on a long term trendline. It may get ugly if it breaks down tommorrow.

I am still looking at select longs in the case that this is simply a restest of support, but I am seeing some juicy shorts as well.

This is the first time I have seen this stock and the chart caught my eye. SABA attempted a breakout today but pulled back with the markets in the afternoon. I like the weekly chart as well showing them over long time resistance.LQDT was one of the stronger stocks today bouncing off support. Formed a nice bullish engulfing pattern today.
CKFR is a short that came up on my Trade-Ideas Short breakdown scan that I highlighted a few days ago here.They look like they may test 200sma.

I saw a lot of homebuilders on my short scan today as well. The homebuilders are pretty steeply oversold as a group, but they are showing signs of a possible downward accelaration. Here is KBH breaking a trendline.
MTH is also lookig very weak and is under lots of resistance.
MYOG is one I have been watching as it tested the uppoer trendline. This is a little different from the breakdowns shown above, as I am trying to pick a bounce off a trendline.

Thats it for tonight.

Good Luck,

DT

The Nasdaq reversed after testing the 200 day sma and 38.2% Fibonacci retrace on Friday. The Nasdaq is vulnerable here considering it has been the weakest of the indices, however, if it can retake the 200 sma, some bulls may get excited and take it to the next Fib levels. The Nasdaq / SP500 ratio is at a pretty low level and the SP500 looks like it has more room to the downside so there is a chance the Nasdaq can retake leadership if we are gonna have a rebound. The key here is too not try and get too fancy trying to predict where things will go. Keep an eye on support and resistance, and have a plan for multiple scenarios. The best traders are prepared well in advance so that all they have to do is react to what is unfolding and not try to analyze a hundred indicators during trading hours.
Here is a chart of the Dow. Bulls need to be careful at how it works its way up here as it could be resolving into a Head and Shoulders topping pattern.
Here is the Russell and it may be setting up to be shorted. Here is a doji at a possible resistance area.
Gold is looking like it is trying to halt the declines here. However, it looks like it will need to consolidate for a while before any meaningful move begins. We are probably looking at a near term bounce and then some consolidation.
Silver is looking like it is finding a bottom here as well. It appears to me that Silver will regain the leadership from Gold on the next leg up.
While GG has retraced much of the prior breakout, no serious chart damage has occurred and it is retesting support here.
JOYG looks like it may be setting up for a drop here. Watch to see how it handles resistance here.
ADS was highlighted last week here and it is looking like it will test it previous high. Watch for a breakout.
BHI has been showing some strength and they cleared resistance Friday.
CSX looks like it will test the upper end of this trading range.
DXPE is waging a battle here with different news releases tugging on the stock. Watch for a clear break of this trading range.
IBCA is still looking decent here as long as it can hold it's breakout area.
ODFL looks like it is clearing a bull pennant here.
NSSC may be clearing a retracement channel. If it is successful it should head to the previous high.
TTI is possible breaking out of a triangle here and indicators are looking good.
XPRSA is a thinly traded stock that likes to trade in these triangle bases. Watch for a breakout here.

It's strange to see this many decent chart setups in the IBD stocks when the Russell Index is not looking as good. Either we will see a bunch of failed breakouts or the Russell will continue to bounce. Keep your stops tight and be prepared for both outcomes.

Good Luck,

DT