Stock Chart Analysis TJX
The TJX Companies, Inc. (Public, NYSE:TJX)

While I am not necessarily bearish, the stock market continues to get extended on the upside and could be close to taking a breather. I've always maintained both a short and long watchlist so that I am not caught off guard by a down move in the markets. In the case the markets do weaken soon, I prefer to look for charts that are already diverging from the markets, rather than attempting to short stocks that have shown strength and are extended.

TJX is a good example of a stock that has not been participating in the markets move higher over the past few weeks. In fact, TJX is trading at two months lows after gapping down below a channel it was trading in. It closed the gap but has failed to get back over its 20 and 50-day moving averages. It is currently trading close to the bottom of the post gap trading range, and could be close to falling out of this range. Possible support area are still pretty far below, and as such, TJX could be presenting a decent risk versus reward trading setup here.

It is important to note that most bearish setups have been failing over the past several months, as the bears continue to get steam rolled. However, the markets have slowly been returning to some semblance of normalcy, and bearish patterns should not be dismissed without thought. The $36 and $38.25 levels are key areas to watch moving forward.



Good Trading,

Joey

Stock Chart Analysis SNDA
Shanda Interactive Entertainment Ltd ADR (Public, NASDAQ:SNDA)

As a trader it's important to keep an eye on the longer term charts in order to gain perspective on the underlying trend. Signals on longer term charts hold more weight than shorter term signals as time filters out some of the noise prevalent on shorter term charts. In looking at SNDA the other night, I noticed it was trading near a descending trend line that marked some recent highs on rally attempts. It broke down in November and quickly reversed trapping some bears including myself. SNDA has been quietly holding above its rising 50 and 200 day moving averages over the past few weeks as it gets close to the trendline. When you look at the longer term charts, you can gain additional perspective on the current consolidation.
Below is a weekly chart spanning the past three years. The first thing that jumps out at me is that the nasty bear market of 2008-2009 looks like a relatively tame correction on this chart. Of course a 50% haircut is nothing to sneeze at, but SNDA easily recovered and was setting new all time highs as other stocks were just bottoming out. The consolidation that has been dragging on for most of this year, appears relatively healthy on a weekly chart, taking on the shape of a falling wedge or bull pennant, which could be labeled as bullish. SNDA appears to have cleared the wedge, although has yet to set new highs. The recent low confirmed the $40 area as support and would be the level to watch for a longer term failure signal. A move above $55 could signal a move to the top of the range and a test of a breakout. Both the daily and weekly charts are in perfect alignment here, and this is a chart that should probably be on most traders watch lists.


Good Trading,

Joey

One of the most talked about financial stories this year was the continued decline in the US Dollar. With the government reducing interest rates to zero in an effort to combat a possible depression, the dollar has endured one of the longest declines in its history. The decline in the dollar has helped push Gold to all time highs, and has forced investors to search for asset classes with a higher rate of return such as the equities market. Recently the dollar has started to turn higher, and many are speculating a possible end to the decline. It also seems that participants for both sides in this asset class are also staunch in their belief of the ultimate outcome. On the one hand, Dollar bears believe the current policy will spark hyper inflation as the Fed has made it clear they will keep the presses running. Some dollar bulls believe the real threat is deflation, and that the economy remains very vulnerable.

One of the benefits to using technical analysis, is there is no need to be emotionally tied to a trade. The charts simply display what is occurring in an objective manner. One way to objectively look at a trend is to overlay the chart with multiple moving averages. This method overlay’s a chart with two clusters of moving averages, one a slow group, and the other a fast group. By paying attention to the moving average clusters, a trader can easily assess the current trend and remain objective about a trading opportunity.

While some traders are starting to get bullish on the US Dollar, a multiple moving averages chart of the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP) is showing that the US Dollar remains in a steep decline. All of the fast moving averages shown in green remain under the slower moving averages. While UUP itself has finally climbed over the cluster of moving averages, it will take much more work to bullishly align the moving averages. It is very possible that the dollar is setting an important low, but realistically, it takes several weeks to months for a stock to transition from a steep decline to an up trend. Often, the down trend is broken and turns into a consolidation. Bulls would be wise to use caution until UUP can begin to drag the moving average clusters into an uptrend.

<-----To read the rest of this article follow the link below----->

Assessing the Trend in the US Dollar

Stock Chart Analysis CALM
Cal-Maine Foods, Inc. (Public, NASDAQ:CALM)

CALM is one of the stocks on my watch list tomorrow primarily because it looks like it is attempting to clear a small lateral range it has established over the past few weeks. This small range is part of a larger overall base between $25 and $30 a share. The $30 level is also critical resistance on the longer term weekly charts. One of the other things I like about this chart is that in getting above this small range it is also moving above the largest price volume bar on the chart. These bars show the volume transacted at each price range. In theory, trading above the highest volume bars would put a larger group of market participants in the money. It appears that CALM is on its way to test the upper part of the range, and could be on the verge of a real breakout. Of course its a little early to speculate on that, but even a move to the top of the range could present a decent risk versus reward opportunity.


Good Trading,

Joey

While I was cautiously optimistic on some oil stocks recently, many are starting to look vulnerable right here. The Oil Service HOLDRs (ETF) (Public, NYSE:OIH) which is a good proxy for Oil Service stocks is close to setting a lower low, which could lead to some near term weakness in the group. While there is some decent support underneath, some individual names are looking more vulnerable.
One name I will be watching is Weatherford International Ltd. (Public, NYSE:WFT). WFT has been trading in a base for the past few months, and set a clear resistance level by failing to hold the $23 area twice. It pulled back on higher volume after the second failure and subsequently broke support in late November. In fact, this breakdown is a classic double top, with the neckline in the low $17's. The emasured move would take WFT near $12 a share.
Currently, WFT is testing the broken support area as resistance, and could present a nice shorting opportunity if it rolls over from here.
A couple of other oil stocks that look pretty vulnerable are Schlumberger Limited (Public, NYSE:SLB) and BJ Services Company (Public, NYSE:BJS).




Good Trading,

Joey

Stock Chart Analysis Dow Jones Transports Average
DOW JONES TRANS AVERAGE (AMEXindex:DMT.X)

While all the recent attention has been on the dollar, financials, commodity stocks and metals, the transports have quietly put themselves in a very interesting position based on the daily chart. In looking at the Dow Jones Transports Average, you can see that the index remains in a trading channel that has been developing since its July breakout. The transports have respected the prior base as support on a few occasions, most recently on the early November pullback. The index has also backed off the 4050 level three times, possibly setting up a small triple top. While the triple top is certainly possible, you could also easily point to a broadening wedge which is often simply a consolidation pattern. Often in these cases, its best to weigh what we know and what levels are of importance moving forward.

• Currently this index is trading above rising 20,50, and 200 day moving averages
• The index has respected support a few times, but remains in a lateral range.
• The breakout level would be above 4050ish
• A break below the 20 and 50 day moving averages would be near term bearish with a possible move to the bottom of the range
• The index remains in a trading range until the 3546 low is violated.
  

What I found interesting is that there are several stocks in this group that have perked up recently. For example, some of the airlines are starting to turn higher and the rails have maintained some strength after the Buffet buyout of BNI. Here are some possible stock ideas for trading this sector on continued strength:

FedEx Corporation (Public, NYSE:FDX)
Norfolk Southern Corp. (Public, NYSE:NSC)
UAL Corporation (Public, NASDAQ:UAUA)



Good Trading,

Joey

Stock Chart Analysis FMX

Fomento Economico Mexicano SAB (ADR) (Public, NYSE:FMX)

I’ve been calling FMX the most interesting stock in the world, mostly as a reference to the commercials for Dos Equis lager which is produced by the company. However, it seems that recently the stock has become interesting on its own merits with buy out speculation running rampant, namely from Heineken. As such FMX had a very sharp surge in early October as the rumors first emerged, and for the most part FMX has held on to those gains. FMX has been trading in a fairly narrow range over the past two months, finding support on each trip to the $42 area. It looks like FMX is starting to test a move back to the upper part of the range near $46-47 after the most recent pullback. FMX has been able to close back above its 20-day moving average the past two days after spending a couple weeks below the average. If FMX can clear and hold above last weeks high near $44.50 it could be worth a shot to the long side with a stop under the recent lows. One caveat to add is that there is always the possibility of any possible deals for the company not coming to fruition and thus possibly causing a gap lower. As such this may be a good candidate for put protection versus just a simple stop.



Good Trading,

Joey

Stock Chart Analysis STP

Suntech Power Holdings Co., Ltd. (ADR) (Public, NYSE:STP)

STP looks like it is getting ready for a sharp move, and while it is currently in a bearish setup, traders should be on guard for a move in either direction. STP had been trading in a large base since early May, when it peaked after a tremendous rally off the March lows. STP had been oscillating between roughly $13-$20 as it consolidated for almost half a year. The first bearish clue appeared in September when a rally attempt in STP failed to move to the top of the range, and ended up resolving as a lower high. STP did hold up above the September 2nd low on the pullback from the lower high, but the bounce was even weaker than the preceding one, and STP followed through a few weeks later undercutting that low and the 200-day moving average in the process.

STP has been consolidating this breakdown in a tight range for about two weeks, and could be setting up for a continuation move lower. A consolidation below prior support is often a bearish development and STP could probably be shorted on a break below $12. However, and this is a big however. The current market has been punishing bears, and many promising looking short setups have been completely invalidated by the market's strength. While the setup favors continued weakness, there is a possibility that a short squeeze could occur. STP has earnings coming up in a week and a half and is still technically at the lower bounds of the existing base. The level on the upside to watch here, at least near term, is the $14 area which coincides with the 200-day moving average. A move back into this area could trigger some short covering and force prices higher.

Good Trading,

Joey

Stock Chart Analysis HL
Hecla Mining Company (Public, NYSE:HL)

I wrote an article last week for Investopedia mentioning that there might of been a buying opportunity present in Silver and in it I mentioned Hecla Mining Company (NYSE:HL) as a silver miner to watch, as it was close to testing an important support level. The support level mentioned was the $4 level, which was a prior high back in June. Notice how HL has been trading in clear horizontal channels over the past several months. It broke out of a base in April and came back to test it a couple of times in May and June. It held this level, and never looked back. It rallied in September to new highs, and has now come back to test the breakout area near $4 twice. It appears to have held that level, and HL had a very sharp move higher today after reporting earnings. Volume was up sharply, and there was also a sharp move higher in the iShares Silver Trust (ETF) (Public, NYSE:SLV) today as well, which could lead to new highs in Silver. It looks like the recent correction in Silver is ending and this could mean higher prices for the miners. I had started to pickup some SLV shares after writing that article, and picked up HL this morning as well. Even if Silver is not ready to go, at least there is a clear area under the recent test of support for which to place my stops.

Good Trading,

Joey

I would like to thank everyone that participated in helping us raise money for the TS Alliance through our first ever Stocktwits Charity Poker Tournament last evening. The tournament was a blast, as 38 Stocktweeps gunned for each others chips online. There was some drama with top bounty man Howard Lindzon initially zooming to the top of the leaderboards, and Brian Shannon almost busting out in the first few minutes. They ended up crossing each other again in opposite directions as Brian bounced back to finish in the top 10.

We are very pleased with the support we received from the Stocktwits Community and taken back by the generosity displayed by several individuals. The total amount pledged to TS Alliance was just over $3000, with more than $2000 coming directly from individuals. Before we get to the tournament results, I would like to thank the following people who donated directly to the charity:

• @inobrad
• @hamzeianalytics
• @johnwelshphd
• @hedgieguy
• @hippowl
• @wwwstockrake
• @stockguy22
  
• @agwarner
• @steelertrader78
• @marketnut
• @ppearlman
• @weeklyTA
  
• High Chart Patterns Group (no twitter)
  

I would also like to single out Phil Pearlman for really stepping up and partnering with me to help organize the tournament. The help from Stocktwits went a long way in helping make this event a success and I am very appreciative of the help. Fari Hamzei also worked diligently in the background to help raise money and I am also grateful for his help.

As mentioned before the tournament was a blast and we received very positive feedback from everyone involved. The Stocktwits stream was buzzing with excitement for the full two hours it took to complete. There was some drama, some bad beats, and in the end, an exciting finish as @forevercaroline took the top honors. There were also some great bounties won, and additional prizes beyond the cash pot.
Here are the final results (Doyles Room ID's)

1 fvercaroline
2 forbsie
3 budfox555
4 ppearlman
5 think2play
6 milktrader
7 jonomaz
8 sayem
9 alphatrends
10 jlcnuketrade
11 brasil61
12 fcagger
13 nsummy
14 cpruette
15 shag007
16 aiki14
17 maktruck
18 fasthowey
19 betacap
20 makc52
21 steelertrade
22 contrahour
23 mxgman
24 gofeltafish
25 dvid07
26 jersey hound
27 ldrogen
28 dtowntrader
29 chartaddict
30 genevate
31 afontwitter
32 royaltrend
33 stockguy22
34 ev4zpoker
35 5starjam
36 tgoddess
37 kosovar
38 johnwelshphd

The following is the Prize Breakdown.

@ForeverCaroline took a huge cache of prizes

• $380 Cash for top finish
• Knocked out Brian Shannon for the following bounties

One year subscription to Marketclub ($350 value) – MarketClub is an online charting system that is constantly scanning 317,000 symbols with buy or sell signals deigned to help traders research, get in and out of trades as quickly and efficiently as possible. MarketClub puts all of your research tools in one easy to use package that together gives you the edge you need to build and manage your investments. Take time to check out the MarketClub Trader’s Blog to learn more about MarketClub and the team behind it

If anyone is interested in trying INO marketclub, INO is offering 2 free months in addition to the 30 day money back guarantee to participants in the Stocktwits Tourney.

One year subscription to INO TV Premium ($100 value) – INO TV Premium is an online collection of over 500 trading seminars from some of the foremost experts in their areas. It’s designed to help new and seasoned traders alike learn trading techniques from the comfort of their home. With 11 channels covering Day Trading, Options, Forex, and more, INO TV is able to help educate even the foremost trading expert!

• Won a free copy of Brian Shannon's excellent book “Technical Analysis: Using Multiple Timeframes” .
• Won a three month subscription to High Chart Patterns Newsletter ($115 value)

The High Chart Patterns group writes a daily newsletter geared towards short term trading, with a focus on only the best setups and patiently waiting for the proper risk versus reward. To learn more about their service visit their site and sign up for a free two week trial.

• Knocked out Phil Pearlman for a Bottle of Patron Tequila
• Won awesome Poker Chips kit offered by Howard Lindzon

@freindofforbsie (Forbsie)

• $228 Cash for Second place finish
• Won a free copy of Brian Shannon's excellent book “Technical Analysis: Using Multiple Timeframes” .

@nhowe (BudFox555)

• $152 Cash for Third place finish
• Won a free copy of Brian Shannon's excellent book “Technical Analysis: Using Multiple Timeframes” .
• Won a bottle of Grey Goose from @downtowntrader for knocking out @weeklyTA
  

@ppearlman

• $114 Cash for fourth place finish (donating to charity)
  

@thinkingtrades

• $76 Cash for fifth place finish
  

@sayemislam

• Knocked out Howard Lindzon for the following bounties

• Stocktwits Schwag Package courtesy of Stocktwits
  

• $200 cold hard cash courtesy of @johnwelshphd
  

• 6 Months Free to @hamzeianalytics HFT Package ($600 Value) courtesy of Fari Hamzei
  

The HFT Package from Hamzei Analytics is a private twitter feed with access to web based live chart streaming used to trade index futures and equity options. There is also a java based backup chat room. The offering is moderated by several pro traders including Fari Hamzei, Brad Sullivan, Rich Gula, Tom Bohn and Scott McCray. For more information please visit the HFT product information page.

Again, we would like to thank everyone that participated and if you missed the tournament and would still like to contribute, you can still donate at the tournament's home page. We will look to run a few of these in the future for different charities, as well as making this one an annual event.

If anyone has comments or feedback we welcome them.

Thanks again,

Joey

I continue to be amazed by the generosity shown by the members of the Stocktwits community. I originally expected a few signups to the tournament and to maybe raise a halfway decent amount for the TS Alliance. Completely unexpected by me was the unsolicited generosity from people like @johnwelshphd and John Lee (@weeklyTA) who have made donations directly to the charity. Also, Phil Pearlman has just run with the tournament idea and managed to help raise a lot of money and get the word out. Towards the end of this week, I received news that Fari Hamzei of Hamzei Analytics had pledged an extremely generous donation as well. Fari has pledged 6 Months Free to their HFT Package ($600 Value) and he will also donate $400 directly to the charity. This a huge offer by Fari and is the single largest donation so far. I am very appreciative of his offer and it's amazing that people I have never met before are just flat out stepping up to help.

Here is an updated list of individual charitable contributions:
Fari Hamzei $400 Cash
@johwelshphd $200 Cash plus $100 if Howard Lindzon is taken out on a bad beat.
John Lee (@weeklyTA) $100 Cash

And an updated list of bounties

Howard Lindzon

• Stocktwits Schwag Package courtesty of stocktwits.com
• $200 courtesy of @johnwelshphd
• 6 Months Free to @hamzeianalytics HFT Package
  ($600 Value) courtesy of Fari Hamzei

Andy Swan

• Bottle of Pappy Van Winkle "World's Finest" Bourbon courtesy of Andy Swan

Phil Pearlman

• Bottle of Jose Cuervo

Trader Alamo

• Stocktwits Hat@Aiki14 (Jim Gobetz)
  

@Aiki14 (Jim Gobetz)

• Stocktwits Beanie

The tournament will be held this weekend and if you plan on participating please complete the sign up steps as soon as possible. There are a few steps to complete so don't let time run out by waiting till the last minute.

Also, don't forget to register for the tournament once you are in Doyles Room with the password provided when you fill out the RSVP page. It seems like many are waiting or forgetting this last step, so please be sure to actually register for the tournament. Also, especially if you're new to online poker, try to play in a few free games just to get used to the software, etc. If anyone has questions, feel free leave me a comment or email me at downtowntrader@gmail.

Here is a list of people who intend to participate

Howard Lindzon
Phil Pearlman
Jim Gobetz (Aiki14)
Andy Swan
@downtowntrader (Joey Fundora)
@TheTradeAlamo
@Stein
@inkstainstudios (Robert Fundora and twin brother to downtowntrader)
@Shag007 (Fernando Alvarez)
@jonomaz
@ev4z
@adamsussman
@nicksummy
@KoSoVaR
@genevate
@betacap
@maktruck11
Brad Sullivan

This adds up to $450 for the prize pool , plus an additional $450 going directly to the charity.

I think this tournament will be a blast and hope to see you guys there.



Joey

Stock Chart Analysis MCO
Moody's Corporation (Public, NYSE:MCO)

There is an interesting pattern developing in MCO and the resolution could lead to a big move. MCO broke down from a consolidation in September on a large increase in volume. This move came after several months of drifting lower, as it corrected a sharp move higher from March through May. On a weekly chart, MCO still looks like death, so the recent breakdown looked like the beginning of an eventual break back to new lows. Over the past couple of weeks, MCO has been rebounding back into the prior area that was holding as support which often provides a great shorting opportunity.

However, MCO has yet to really show weakness on this bounce, and is now peeking its head back into the base. This market has had a plethora of failed bearish breakdowns, and its interesting to see if MCO will now join the list. Who knows if this move is related to options expiration tomorrow or not, but MCO would surely catch a lot of bears off guard if it could rally a few more days. My inclination would be to short this on any weakness at these levels, but I am open to anything occurring at this point. As traders, we should always prepare for multiple scenarios so that we are not caught scrambling by the unexpected.



Good Trading,

Joey

First off, I would like to personally thank @johwelshphd for offering a huge reward for anyone knocking out Howard Lindzon from the Stocktwits Charity Poker event. He has pledged $200 to any of his followers that knocks out Howard, plus an additional $200 directly to the charity. This is a total contribution of $400 and frankly, surprised the hell out of me. I am extremely appreciative of his generosity and it goes to show you that our community is full of great people. The list of beers I owe to someone grows by the day.

** Update - @hamzeianalytics has also added to the bounty on Howard with a free three month sub to their HFT offering. Many Thanks!!!

We have some high profile Stock Tweeps already registered with Howard, Phil Pearlman, Jim Gobetz (Aiki14), Trader Alamo all committing. We will also have a another big hitter to announce this week who has also pledged a bounty on his own head. This event should be a blast and there is still time to sign up and compete for cash and prizes in the event, and help advance a worthy cause. For more information on how to sign up go to our sign up page.

See you there!

Joey

I've been working on organizing an online Poker tournament for charity for the past few months. I reached out to the folks at Stocktwits.com and they were more than happy to help a lending hand, for which I am very appreciative. I decided to organize this event to help a friend of mine who has a child with Tuberous Sclerosis and raise money for the TS Alliance. Tuberous sclerosis complex (TSC) is a genetic disorder that causes tumors to form in many different organs, primarily in the brain, eyes, heart, kidneys, liver, skin and lungs. Today I'm happy to officially announce the tournament.

The tournament will take place Sunday October 25, 2009 at 6:30EST. The tournament should be loads of fun as it offers a chance for members of the Stocktwits community to compete directly with each other and win prizes. There will be bounties placed on community members as well which should make the tournament even more interesting. The tournament will be No Limit Texas Holdem with a total buy in of $50. $25 will go towards the charity and $25 will go towards the prize pool. If anyone is interested in participating please visit

www.pokerformycharity.com

Stock Chart Analysis GLD
SPDR Gold Trust (ETF) (Public, NYSE:GLD)

I posted this chart on Chart.ly the other night and mentioned it had the sausage link pattern setting up. This is a simple reference to how the bollinger bands resemble sausage links when a stock is trending strongly. Basically the bands expand as the stock rallies and contract as it consolidates. Often, the bollinger bands looks very messy and loose when a stock is in a trading range, but once a stock starts a trend move, the bands begin to take a better shape. While this isn't technically a trade setup, it is a clue that GLD may be in the early stages of a breakout.

Another clue on this chart is how RSI is confirming the new highs in price with a move to the highs in the indicator. This again, is not a trade setup, but another clue that the chart is looking healthy. However, the most important factor in this chart is that GLD has decisively cleared a very large trading range. Price action is always the first thing we should look at as traders, and GLD has just rallied to new highs clearing resistance that has held for over a year. While there is always a chance of a bear trap, especially when it seems everyone believes in the breakout, at this point the benefit of the doubt has to go with the bulls.



Related Post: http://downtowntrader.blogspot.com/2009/09/stock-chart-analysis-gld.html

Free Video on Trading GLD

Trading Ideas based on Gold rally continuing:

Yamana Gold Inc. (USA) (Public, NYSE:AUY)
Goldcorp Inc. (USA) (Public, NYSE:GG)
IAMGOLD Corporation (USA) (Public, NYSE:IAG)
Royal Gold, Inc. (Public, NASDAQ:RGLD)
Agnico-Eagle Mines Limited (USA) (Public, NYSE:AEM)
Newmont Mining Corporation (Public, NYSE:NEM)

Good Trading,


Joey

excerpt of an article I wrote for chartadvisor.com

Back in June, we took a look at stocks that trade in the education sector. At the time, we noted how the group had managed to avert a breakdown and appeared to be on the rebound. The group had been in a correction for several months, and had continued to weaken even as the markets bottomed during the spring. But after a brief move lower, education stocks found support, and were able rally enough to change their trend into a sideways consolidation. Now, the group has been building a nice base for several months, and could be close to clearing these levels to the upside.

continued here

stocks in this article

DeVry Inc. (Public, NYSE:DV)
Apollo Group, Inc. (Public, NASDAQ:APOL)
Career Education Corp. (Public, NASDAQ:CECO)
Capella Education Company (Public, NASDAQ:CPLA)

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Back in May, we discussed possible accumulation in the coal sector based on solid price action that was occurring in some of the stocks. Many of these stocks were clearing bases on good volume, and were in the process of consolidating the initial breakout by trading in bull flags. In general, this group did indeed move higher following their May breakouts, and ended up building new bases in the subsequent months.

The Market Vectors Coal (NYSE:KOL) ETF for instance, broke out of a bull flag in mid May, rallying to $27 a share. KOL proceeded to consolidate for a couple of months before making a new high in early August. After trading to new highs, KOL continued to consolidate, although in a narrower range than before. It looks like it is beginning this process once again with a new high in September, followed by a quick pullback to test the breakout area. While the rally in KOL has not set the world on fire, KOL has been steadily setting higher highs and higher lows.

Continue to rest of article

other symbols in this article include:

Market Vectors-Coal ETF (Public, NYSE:KOL)
Patriot Coal Corporation (Public, NYSE:PCX)
Arch Coal, Inc. (Public, NYSE:ACI)
James River Coal Company (Public, NASDAQ:JRCC)

Stock Chart Analysis PALM
Palm, Inc. (Public, NASDAQ:PALM)

I'll have to admit, I am a little surprised by the recent strength in PALM. It looked like the stock was getting tired back in June after the exhaustion gap on huge volume, and for the most part it was. PALM proceeded to pullback to its 50-day moving average in July, and then lost that level as support a few weeks later. It really looked like PALM would end up making a trip to test its 200-day moving average near $10, but PALM held support near $12.50 as it traded in a broadening wedge. PALM cleared the wedge on huge volume and then followed through with a move to new highs. It's since come off those highs but remains perched near the July high and the upper end of the established trading range. An ideal situation would be for PALM to consolidate in this area for a few sessions and establish a nice low risk entry point, but even in a less than ideal situation, PALM warrants being watched at this point. PALM is trading at multi year highs and has 39% of the float held short, and that could be a nice recipe for a short squeeze.




Good Trading,

Joey

The general markets made their second trip down to test their rising 20-day moving averages in less than a month, even after tagging new recovery highs earlier this week. The Federal Reserve issued their policy statement on Wednesday afternoon, as is common; there was plenty of volatility surrounding the announcement that afternoon and through the end of the week. While the markets continue to trend higher overall, the big question facing traders is whether the markets are ready to begin a much deeper correction to the rally that began in March. Without a doubt, the bulls have had the upper hand over the past several weeks, and at this juncture, the benefit of the doubt remains with this simply being a pullback to relieve overbought conditions. However, there are cracks that continue so appear on the charts, and alert traders should be cautious moving forward...... read more

Stock Chart Analysis ZION
Zions Bancorporation (Public, NASDAQ:ZION)

ZION has been one of the most reliable stocks for me on the short side over the past year. It seems every time there is market weakness, ZION has been there for me as a financial stock that would drop quicker and further than many of its peers.

However, something changed over the past few months. ZION started failing as a short. In fact, ZION has been acting bullishly now, for a couple of months, flagging near resistance. If you look back you can notice a distinct change in ZION's trading pattern after the July low in how it consolidates. Prior to July, ZION would have an impulsive move lower and then flag upwards as it consolidated the down move. After the July low, ZION began having impulsive moves higher, with the flags drifting lower which is bullish. Currently, ZION is flagging near resistance after attempting a breakout above $20. With over 25% of the float being short, a move above this level could trigger a sharp move higher. The level to watch on the downside is the August and September low, which if breached could lead to a retest of the $10 level.

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Good Trading,

Joey

Stock Chart Analysis XTEX
Crosstex Energy, L.P. (Public, NASDAQ:XTEX)

Natural gas has been a popular trade this year, particularly by long traders attempting to pick a bottom in the commodity. Despite several attempts at a rally from new lows, the commodity as tracked by the United States Natural Gas Fund, LP (Public, NYSE:UNG) ETF has been in a death spiral for over a year. While UNG has some highly publicized issues of its own, the bottom line is that Natural Gas has been heading lower for the same amount of time with little respite.

What is interesting however, is that some natural gas stocks have been perking up lately, even as Natural Gas continues to struggle near lows. Chesapeake Energy Corporation (Public, NYSE:CHK) for instance, is trading at 11 month highs. One stock that I am watching in this group, is a small cap play that has been working on a base for several months.

XTEX was hit pretty hard during last years market free fall dropping from a base in the $30's down to $1 in just 10 months. XTEX pulled off the lows pretty quickly, and stabilized in the $2-$4 range. XTEX has been gradually tightening its trading range and is in the process of testing the upper bounds of the established base. A move above $4.10 could lead to a full fledged breakout above the base. One of the reasons I find XTEX attractive is the lack of congestion areas above due to the dramatic fall it had last year. If XTEX can get going, it could lead to a surprising surge higher.



Good Trading,

Joey

Stock Chart Analysis ABK
Ambac Financial Group, Inc. (Public, NYSE:ABK)

There is an interesting pattern developing in ABK. While I won't speculate as to the fundamental picture for this fallen company, the chart in ABK is following a similar pattern to other "broken financials" such as Citigroup Inc. (Public, NYSE:C), Fannie Mae (Public, NYSE:FNM) and Freddie Mac (Public, NYSE:FRE). Each of these built a long lateral base and eventually cleared it.

ABK is working on the lateral portion of this pattern, and has been consolidating for several months after a horrific decline last year. Volume has been gradually building on the right side of the base, and ABK is trading in a small pennant over the past few trading sessions. If ABK can clear this pennant, the chances for a full fledged breakout above the entire base are pretty decent. If it can clear the base, a test of the October Highs near $4 is a possibility.


As with any trade, please exercise due diligence to see if this setup conforms to your trading plan.

Good Trading,

Joey

Stock Chart Analysis C
Citigroup Inc. (Public, NYSE:C)

I've been long a few calls in Citigroup from it's initial breakout, but I may be adding to the position here soon. C has been developing nicely, and in the chart below I highlight what it is I am looking at and why I like it. C cleared a multi month base in late August and has been consolidating above the breakout area for a couple weeks now. Volume has increased dramatically on the recent move higher, and C has held above its rising 20day moving average since July. While some of the volume could be attributed to High Frequency Trading as C comes into the spotlight, there is a distinct possibility that some of this volume is accumulation by institutions. It looks like C had a capitulation low in March, and with the move above the base that followed that low, it's quite possible that C is putting in a long term bottom. While I'm not treating this as an investment, the fact is C could be getting institutional support moving forward, and could have a nice surge with a move above the recent high. With C possibly finding support here at the 20day sma, it might be a decent place for me to add to my position. Please complete your own due diligence if considering this trade.



Good Trading,

Joey

Stock Chart Analysis RIMM
Research In Motion Limited (USA) (Public, NASDAQ:RIMM)

There is a pretty interesting chart setup developing in RIMM. RIMM has been flying a little under the radar recently with all the recent focus on Gold Miners, Financial Stocks, and even American International Group, Inc. (NYSE:AIG). Even in the mobile phone space, its all about the Apple, Inc. (Nasdaq:AAPL) I-Phone or the Palm, Inc. (Nasdaq:PALM) Pre right now.

However, RIMM has been consolidating a breakout from a substantial double bottom pattern on the weekly chart for several months. The two lows for the double bottom occurred in December 2008, and March 2009. RIMM has been coiling tightly, as it trades in the triangle highlighted in the chart below. A breakout in either direction should yield a great trade opportunity.

It's interesting that not a lot of people are talking up RIMM bullishly. In fact, based simply on my observations, it appears that more people are generally bearish on RIMM. While RIMM is not heavily shorted with only about 3% of the float held short while PALM has roughly 36% of the float held short, the majority would probably not believe in a full fledged breakout in RIMM. This would probably work in the bulls favor, as people betting against a rally could provide more fuel for the fire.

Beyond speculation on the underlying sentiment of RIMM traders, the chart for RIMM, while still technically in a consolidation has bullish implications. RIMM has refused to trade down to test the double bottom showing a willingness for investors to pay higher prices in order to get in to the stock. The huge gap on the chart has not even been challenged, which is also a bullish sign. RIMM has also been setting higher lows on each pullback. Also, triangle patterns are usually continuation patterns, and the trend heading into the triangle was up. RIMM is currently trading up to test the upper range of the triangle and could be close to breaking out. While a break of the trendline would be a valid signal, the first true test is for RIMM to clear the August high. This could possibly signal an end to the consolidation via the higher high. Of course a failure must also be accounted for, and if RIMM falls out of the triangle, then a test of the double bottom neckline should be expected and possibly an attempt at the gap fill. With either scenario, a sharp move appears to be in the cards for RIMM. Earnings are on September 24, so the question is do we get a move into earnings or after?


Good Trading,

Joey

Stock Chart Analysis GLD
SPDR Gold Trust (ETF) (Public, NYSE:GLD)

Really nice follow through by the metals complex today after a strong move yesterday. Volume has been rising on move higher, and everyone is wondering if this is "THE" gold breakout that they have been waiting for. The one thing that has stood out to me recently is how Gold and Silver are holding up even on days where the dollar is strong. While there are a million reasons as to why gold could rally from here, to me the why is secondary. The charts are giving us plenty of clues that something is up, and that is good enough for me.

Below is a chart showing both Gold and the Dollar Index. This chart is showing that Gold has continued to rise over the past ten years with less regard for the dollar than you would think. While the inverse intermarket relationship between the two is generally accurate, over the past few years the relationship has been decoupling. If you simply glance at the chart the relationships hold true as gold is basically moving from the lower left side to the upper right side signaling a bull market. The Dollar has been basically the opposite. However, if you dig a little deeper, you will notice that the Dollar has continued to rise even during flat periods for the dollar and more recently, despite dollar strength. It will be interesting to see if this relationship can continue to decouple if gold clears resistance. Oil decoupled from the dollar for a long period, so there is no reason to believe gold won't do the same.
Below is a weekly chart of GLD, showing a critical test of resistance. Gold has been trading in a large consolidation for the past two years, and is currently testing the top of the range. Overall, Gold refused to give up much of its rally during the vicious bear market of 2008 and has remained one of the few asset classes to do so. While overall the chart is bullish, there are some chinks in the armor. Notice the price volume bar that I circled, showing how the majority of volume has occurred at these prices. This is actually usually a sign of distribution, as an increase in volume without a price increase hints at institutional selling. However, if GLD somehow can clear this area, then it could cause a nice short squeeze as there would likely be a large contingent underwater on their trades.


Gold could easily go either way here, as there are several valid reasons to argue one side versus the other. Volume has been stronger recently as it tries to breakout, but volume is actually pretty light compared to past levels on the weekly chart. It also seems as if everyone expects a breakout, which could be interpreted as a contrarian signal. I could go on, but regardless of the ultimate outcome, the potential for a massive move exists, so it is worth betting on. The key, as with all trading, is to incorporate prudent risk management and the willingness to admit that it could go either way.


Adam Hewison of Marketclub also came out with an updated free video on gold that is worth watching.

Good Trading,

Joey

Stock Chart Analysis STAR
Starent Networks Corp. (Public, NASDAQ:STAR)

I mentioned a few times on twitter over the past couple of weeks how STAR was looking bearish to me. Nothing has occurred on the chart to sway my initial thoughts, and in fact, I initiated a short position in STAR last week, when it appeared to turn down after testing its declining 20-day moving average. While the vast majority of my blog posts are of stocks I am watching for an entry, I decided to post this one to show some of the things I am looking at for this setup. In addition STAR is starting to look like it is ready to break down from a topping pattern, and is still within a reasonable area to enter a new position from a risk versus reward perspective.

In looking at the chart, STAR has been in an undeniable uptrend, making higher highs and higher lows. It has been steadily finding support on pullbacks, and hasn't had any parabolic moves that weren't sustainable. While the majority of the price action has been healthy, there have been subtle signs of distribution setting in. In early July, STAR pulled back in a typical manner to its 20 day moving average, and predictably found support. On the succeeding rally, STAR broke to new highs, and quickly failed. Notice the topping candle on the day it hit a high of $27.08. It subsequently gapped lower the next day on strong volume. It hasn't recovered from that failure, and the gap remains unfilled. This tells me that there is a pocket of trapped traders willing to sell anytime STAR approaches the gap. STAR has been trading in a flat range, unable to break back above its 20 day moving average, a level that consistently held as support. Beyond that, it is now below its 50 day moving average as well.

Moving past these small details, if you step back and examine all this trading action as a whole, it appears that STAR is forming a larger topping pattern. While the base looks like a head and shoulder top, the name really isn't important. What is important, is that there has been an increase in volume as STAR has basically traded sideways after a healthy move higher. Consolidations should take place on decreasing volume. Increasing volume usually signals distribution. In order to get a better picture of volume, I added Volume Average Price bars to the chart, which show the majority of the volume shown on the chart has taken place in this base. This tells me that if STAR breaks under the pattern, that the majority of traders involved will be underwater. Now before getting carried away, also note that STAR is technically sitting on support, and could easily bounce from these levels. It could also easily break down trapping bears, and then break back higher. While I don't believe these scenarios are likely, they do exist. Just be aware that even the best looking setups can fail, and the most important thing a trader needs to do is to always exercise due diligence and maintain strict discipline with regards to money management.




Good Trading,

Joey

Stock Chart Analysis DV
DeVry Inc. (Public, NYSE:DV)

I've mentioned a few times recently on twitter, that education stocks have been quietly improving. DV, is a perfect example of an education stock that has been improving, after threatening to breakdown from a multi-year base in May. It grinded out a bottoming pattern from March through early August that could be classified as a reverse head and shoulders. It seems like DV really started acting a lot better once it was announced that it was replacing GM in the S&P500 back in June. It set a higher low on the last pullback, and just recently cleared the base it has been building. It is currently testing the breakout by consolidating just above the prior resistance. If you step back and look at an all time monthly chart, the chart actually looks quite bullish, with DV not too far off new all time highs. If DV can get over the recent high near $53, it looks like it could run another 10 points on its way to test the January highs.


Good Trading,

Joey

Stock Chart Analysis SNDA
Shanda Interactive Entertainment Ltd ADR (Public, NASDAQ:SNDA)

The general markets continue to hold up, and have been basically trading sideways for the past two weeks. While overall this is probably more bullish than not, I continue to look for some bearish charts in order to remain flexible and even a little hedged. SNDA is one chart that looks pretty bearish to me, with a nice topping pattern in place.

On the chart below, I highlighted a double top, with the second top also being a slightly lower low. It also had a minor rally in between, and technically is close to a triple top. The name or pattern is not as important as the price action. SNDA had a nice rally from through June, but has been unable to build on the initial up thrust. In fact, volume has increased on the consolidation which warns of distribution. SNDA broke down from the double top in late July and has been trading under resistance for the past few weeks forming a bear flag. It broke down from the flag this week, and could be headed much lower. Both the double top and flag measured targets take it down well into the $30's. While there is a pocket of support near $44, it looks like SNDA is headed for a test of the 200-day moving average before finding real support. Of course there is always the threat of a bear trap, so please do your own due diligence and set your stops accordingly if you take this setup.

Good Trading,

Joey

Click here for a free marketclub video on Coffee and Coffee stocks including Starbucks

Stock Chart Analysis OIH
Oil Service HOLDRs (ETF) (Public, NYSE:OIH)

Typically oil and commodity type stocks are late cycle plays, and being that we are either in the middle of a bear market, or optimistically in an early bull, I haven't been too excited about any sort of trending move in the group. While, there has been opportunities on smaller time frames, I have been ignoring the sector as a possible group in a bottoming process, due to the my views on market cycles. However, maybe because of the weakness in the dollar, or because these stocks were beaten down so bad, some of the oil names are starting to show signs of a bottom. OIH, which is an Oil Service Stocks ETF, is also showing a potential bottom and has made it onto my watchlist. While I prefer to play the ProShares Ultra Oil & Gas (ETF) (Public, NYSE:DIG) for short term trades, I always prefer to chart non leveraged ETF for my primary analysis.

In looking at the OIH chart, it had been in a several month consolidation after dropping from a bull market high of near $229 a share to near $61 in a span of just 6 months. The $87 level rebuffed the first few breakout attempts and proved to by a significant price level. It finally cleared this level in April, and was able to follow through with a sharp move higher. It has since been in a consolidation and ended up testing the breakout area after pulling back in late June. It looks to have held this level and formed a higher low. This is significant, because the action is hinting at a bottom. OIH cleared a base and set a higher low. While the chance that this is a failed breakout exists, currently, the chart is still healthy. The key area to watch here is the small consolidation taking place between roughly $99 - $108. A move above will clear the descending trendline framing the current consolidation and a move below will probably lead to another retest of the breakout area. Either move may offer a good trade opportunity.



Good Trading,

Joey

Here is an updated marketclub video in the spot gold market. Adam takes a look at where gold is and whether its ready to breakout or not. Not to spoil the video, but things are shaping up for a breakout as Gold continues to set higher lows on the daily chart and inches up towards resistance in the upper 900's. Click on the Link below to watch the free video.



Enjoy,


Joey

Stock Chart Analysis QSII
Quality Systems, Inc. (Public, NASDAQ:QSII)

I don't post frequently on the longer term setups I am watching, as my main focus is on swing trading for a holding period of a few days. However, I always keep track of weekly charts to let me know from which side the wind is blowing. If I'm going to lean one way or the other, I prefer the longer term trade in my favor.

When looking at weekly chart, I will sometimes find a true multi year breakout, that merits a closer look. When a stock clears a multi-year base, it typically means most bagholders are in the money and comfortable holding. With lack of overhead supply, and momentum money flowing in, the possibility for a good trend is strong.

Quality Systems, Inc. (Nasdaq:QSII) is an example of the type of chart I like for this type of trade. If you look at the weekly chart below, QSII recently cleared a 4 year base. If you dig a little deeper, you can see that QSII never even gave up the base despite the horrific decline last year. It had attempted to breakout last July, before failing and trading in a very erratic and volatile range once the markets fell apart. As soon as the markets set their recent intermediate low, QSII embarked on a clean run to all time highs. While QSII still looks relatively healthy, it is a little extended on this time frame, and with the general markets really overbought it's probably a good idea to wait for it to pullback a little. I am eyeing the $45 level as a possible area, but I will watch the price action to see what develops.



Good Trading,

Joey

Taking profits is one of the hardest things for a trader to learn once they get past the basics. There are a myriad of strategies a trader can employ, each with their pros and cons. I've mentioned how I use a volatility based exit strategy called the Chandelier Stop a few times on this blog and twitter, and it is the subject of an article I wrote for SFO Magazine. It came out in this months issue and goes into great detail in how the stop is constructed. Check out the Chandelier Stop article here if you're interested in learning more.

Any feedback is welcome and appreciated,


Joey

Click here for a free marketclub video update on gold

Stock Chart Analysis BKE
The Buckle, Inc. (Public, NYSE:BKE)

While I've been bullish for the past several weeks, I always have a few short ideas in my watchlist in case I am wrong on my market analysis. I also like to have some short setups available in case the markets get overbought and begin to reverse. I don't want to bail out on positions that are behaving well, but I also don't have any interest in sitting through a pullback unhedged.

Currently, the markets are behaving very strongly, but they are also starting to get over heated. In these situations, I start looking for stocks that are not participating and therefore likely candidates to lead the way down on weakness. I have no desire to short strong stocks "that are too high".

BKE is a stock that I've been watching for a few weeks, and in fact wrote about for Investopedia on July 14th. While it has been a strong stock if you look at its performance over the past year, it has basically gone no where over the past month. While technically, its consolidating, it is also in a vulnerable spot here. BKE began the consolidation after a strong breakout from March - April. The consolidation ran into trouble in June, when BKE failed to rise to the top of the established trading range. It then proceeded to break under the prio two pivot lows, but did find support and climbed back into the base. It is now back to the trendline and also under a declining 50-day moving average. A break under recent trading range could lead to a full fledged breakdown. With a clearly defined stop loss above 32.50, BKE could offer a decent trading setup. While I'm not ready to start shorting gung ho, I will be watching BKE and charts like it over the next few days.



Good Trading,

Joey

Stock Chart Analysis FEED
AgFeed Industries, Inc. (Public, NASDAQ:FEED)

FEED has been on my radar since I traded it successfully back in April. I've been able to trade it a few times on the breakouts for quick gains. It looks like it is setting up for another potential move higher, and I will be looking to get long if it cooperates.

FEED has been progressively trading higher, building lateral trading ranges on each breakout. After gapping strongly off the March lows, it traded in a triangle / pennant for about a month. It then surged higher on an increase in volume and settled into another trading range a few weeks later. This trading range lasted about a month again, and FEED once again surged higher in late May. With a 700% move from low to high, FEED was due for a breather. It has been consolidating the last breakout for the past two months, actually retracing the entire breakout. It has fallen out of many traders radar, as volume has died down. It just snuck over the declining trend line that was framing the correction and has been trading in a tight range over the 20-day moving average. If it can clear this small trading range to the upside, then it could make a quick move to test the top of the pattern. With a stop below the trading range, this would offer a risk of about 50 cents for a 2 dollar move. These are the type of setups I look for, and is one I will be watching over the next few sessions.



Good Trading,

Joey

Adam Hewison of Market Club recently created a video with an updated look at the spot gold market. The video highlight the recent consolidation level and some important levels to keep an eye on. He also mentions how gold is close to triggering a buy signal on the weekly chart according to their proprietary trade triangles indicator. The trade triangles indicator is actually a pretty good system for keeping you on the right side of the trend. If you're interested in more, it's free to try marketclub and you can sign up after the video. The video is free to watch as always.