Harry Boxer, On LEAP's Short Potential (TheTechTrader.com)
Today I'm going to talk about Leap Wireless International (Nasdaq: LEAP) on the short side. It's on my "Boxer Shorts" list and continues to look negative. Even in Monday's rally this stock was down, although it did come back off the lows. The current pattern shows a left shoulder, head, and right shoulder pattern that was broken on heavy volume, and over the past five or six days this stock has been in a kind of a bear-flag box, with terrible technicals. We would like to see it rally back up towards 30 1/2-30 3/4 zone, ideally, in order to pick up a potential short position at the neckline of the head and shoulders, which is key resistance as well as the declining 21-day moving average.
Looking at the longer-term chart there's a double bottom from the Jan-Feb period, around 22- 21 3/4, which was my initial trading target. This stock is just not acting well, obviously, and looks vulnerable to a lot lower levels. In a good market environment where stocks that have come down rallied sharper Monday, this really didn't respond that well. If the market does run up in the morning on Tuesday and starts to reverse, this could be an ideal position. Or over the next two, three, four days, the possibility exists that it could edge higher as long as the technical levels don't improve dramatically and volume doesn't surge.
Jack Steiman, On the Market's Technical Anomoly (SwingTradeOnline.com)
This market has been nothing short of unplayable, but Monday we saw some things technically we should not have seen. When you break down out of a pattern that's not always reliable, such as head and shoulders, you should not get back above that neckline breakdown. It just shouldn't take place, but Monday it did just that. The market broke back above 8250 on the Dow and above 1750 on the Nasdaq, while the S&P 500, which spent some time at or below 875, is now well above that for sure. It's interesting to see all three major indexes close above those neckline breakdowns. For now it looks like a classic false bearish breakdown. Looks like big money sucked in the bears who got aggressively short and smoked them. The story isn't written yet though so nothing to get excited about yet. This market has gone exactly no where over the past eight weeks. Lots of fakes both ways and we're not even cleanly above SPX resistance at 900. If we get above in the morning, we'll have the short-term charts at RSI's well over 70 so we'll have to pull back. it isn't going to be easy for anyone.
This has been an incredibly difficult market. Everyone has been fighting this game lately. The market is faking all over the place and ultimately going nowhere at all. Some day we'll have to lose 875 or take out 956. Who knows when. In between you must tread lightly. Being mostly cash has been the right way to play. There are lots of good plays setting up both long and short but we would play what we thought was the trend in play. If we move over 900 with force and hold it on the selling from overbought, there are some good long set ups waiting. With the head and shoulders made null and void for now, we have to be careful. It is one of those times in the market cycle where too much of anything is not a good thing.
Mike Paulenoff, On Goldman's Importance to S&P (MPTrader.com)
Early Monday morning the S&P 500 e-mini futures contract pressed to test last week's low at 865.25, held, and then pivoted to the upside - with the help and catalyst of Meredith Whitney's short-term upgrade of Goldman Sachs (GS) and the banks - Bank of America (BAC), in particular. Her recommendation first triggered buying in GS that otherwise might have waited until after earnings are reported Tuesday morning, AND also triggered a nasty around of short-covering above 884.50 that propelled prices right to the next optimal measured target of 895-897.
Now what? If GS earnings perpetuate even more strength early tomorrow, then the e-mini S&P should head for 904-907 next. On the other hand, if for any reason the G8 results elicit a "sell-the-news" reaction, then weakness should return prices to today's upside breakout level at 885-883. A sustained break below 883 will argue that Monday was a "1-day wonder" and that the full weight of the larger head & shoulders pattern is about to lean on the e-mini S&P after getting very twisted with the G8 action.
Gary Dean, On Looking for Pullback to Start in Coming Hours (MarketsPath.com)
The S&P 500 followed the roadmap to a T on Monday. The 884 area acted as the resistance and 876 acted as support. It was very hard to trade because of the weakness in the PowerShares QQQ Trust (QQQQ) during the pullback. But if you traded the roadmap, you did very well.
The head/shoulders bear waiters are now starting to see what happens when too many traders or the "herd" are watching the same pattern. But the wannabees will tell you they covered with today's early sell off. They are so good at being able to tell when a decline is only a head fake..lol.
This move from the 869 lows is doing what it is supposed to be doing. Throwing some doubt in the heads of the bears. I still believe there is still some more work left on the upside before this is finished. But I am expecting some backing and filling in the coming hours, which should set up the last leg higher, if the roadmap is still in tact.
Bottom line: The short-term negative divergences have me looking for a pullback to start in the coming hours. But we should still see another push higher by weeks end. The 907-912-918 levels look like possible landing areas for this leg up when completed.
For Tuesday: If we see early strength, we will look to fill our short side trades at the 903-907 pivot zone. Early weakness will have us looking for an exit strategy and where we will look to possibly switch hats to the long side. Watch the 891-888 level for support.
