Mike Paulenoff, on When to Go Short (MPTrader.com)
We have been discussing with our subscribers the upside potential of a failed head and shoulders top pattern in the S&P 500 -- as in the price structure climbing a distance that equates to about twice the width of the "right shoulder". If the right shoulder measured about 63 points, and if we add 63 points to the top of the shoulder at 928.25, we arrive at an approximate target of 991.00. Monday's new recovery high hit 984, which is just a miniscule 0.7% from the measured target price. Is this the time to start a countertrend position in the e-SPU or SPY? Or should we be patient for a while longer, allowing month-end crosscurrents to run (possibly on the upside) prior to committing funds?
My sense right here is that most everyone is thinking about and afraid of the same thing: missing the pullback, which suggests strongly to me that entering short positions HERE is a bit pre-mature. Having said that, however, I am also mindful of key near-term support levels - Monday's low at 969.00, and the prior pullback low at 962.50. If those key near-term support levels are breached I will be much more inclined to enter new short positions.
Harry Boxer, on 4 Charts to Watch (TheTechTrader.com)
Our first chart is Jazz Pharmaceuticals, Inc. (JAZZ), which had a big run up in June on drug news, followed by about 4-5 weeks of consolidation, flagging and coiling-type action. But each time the stock popped or tried to, it was a strong volume day.
Monday was an exceptional day, up 1.92 or 44% at 6.30 breaking out across overhead resistance and through the resistance zone, and closing basically within pennies of the high today going away. With full green Balance of Power, and Money Stream at the top of the window as well as the On-balance Volume, this is a stock that's got strong momentum and it could run hard over the next couple of days.
Affymetrix, Inc. (AFFX) has a strong channel underway. The price volume surge last Thursday was followed by two consecutive narrower days and a slightly rising triangular wedge pattern. There's been lower volume the last couple of days, but the technicals remain very strong. I expect that this could break out over 8.30 and run up into the 9.50-10 range short-term, maybe higher.
Novavax, Inc. (NVAX), which ran up in April, pulled back and then backed and filled, but notice that each successful high volume day was on an up-day, signaling the potentiality of a move. This stock has moved from 2.5 to 4.40 in the last week, but in the last couple of days it's broken out above the two highest days in the last two months and actually took out the spike high in April today closing right beneath overhead resistance around 4.40. It got up to it today and backed off to 4.23. But with heavy volume at 22 million shares and with the stock holding above its trendline and moving average, this stock could start to accelerate as well.
Geron Corporation (GERN) had a terrific session today. The high in late '07 and the one in early '09, both around the same range, were taken out today with volume of 8.6 million shares and improving technicals. A quick move takes it up to the next resistance level around 10.00 level, expected as early as tomorrow. But beyond that a long-term rising channel is under way, which shows that this stock could get up as high as the 16 range, thereabouts. But right now the immediate target is 10 followed by 12 and then 15.5 and 16.
Jack Steiman, on Significance of Clearing SPX 956 (SwingTradeOnline.com)
Monday saw the highest close on the S&P 500 since the rally began. The old closing high at 944 was easily eclipsed, and that's just the beginning. Every major index we follow, and you know the group, have broken out over their 20, 50 and 200 day exponential moving averages. That's also a first. A lot of first's taking place and that has to be construed as a bullish harbinger of things to come. The Nasdaq closed at 1909. It hs its 20/50 and 200 day ema's at 1823, 1751 and 1762 respectively. Well above them all. This leading sector should be the healthiest in a bullish environment and it is. The SPX has its levels at 915, 905 and 936. With its close at 951, it too is well above.
Finally, for those who follow the Dow as the leader, and many do although you shouldn't, it closed at 8848. Its 20/50/200 day ema's are at 8486, 8410 and 8763 respectively. Finally the Sp and Dow have joined the Nas in trading above its 200 day exponential moving average. Solid, bullish action. We have posted a chart on the SPX which clearly shows the normal retracement levels one could expect if we do clear 956. 1014 is the 38% level and 1121 is the 50% level off the lows made at 666 from the 1576 highs. Never a guarantee that these levels will be achieved but the door would be open to reaching either of those two levels in time. It's a process as you know with plenty of overbought pullbacks along the way. If we clear 956 SPX we would simply use weakness to accumulate positions. Do keep in mind that with all I've spoken about tonight that looks solid, we still have yet to make the move. Big earnings reports are ahead of us, starting with Aapl tomorrow evening. Cat and many others are tomorrow as well. That's just the beginning so you never know for sure but things are looking up for further gains in this cyclical bull that appears to be underway here. One slow step at a time as always. Never get too greedy. It won't work.
Gary Dean, on the Indices Ignoring the Sell Signals (MarketsPath.com)
The S&P 500 made it up to the 980 pivot in early trading Monday and spent the remainder of the day drifting lower. The bears were unable to bust through the 970 pivot and that left the door open for another test of the highs. The bulls took little time running the SPX back up to the highs. This is now the 11th straight up day for the SPX and from what I am reading or hearing from the talking heads, nobody is even thinking of a pullback at this point. 1050 seems to be the norm as far as a landing area and whatever bears that were left standing were simply throwing their arms up in the air today.
The pattern is suggesting another push up to the 990ish area and many are watching for the magical 1000 marker to really get the party started. There are plenty of different scenarios that could be playing out in the coming days, and the reverse symmetrical triangle I have been following is still in tact.
Now I have mentioned a few times about the funny money that is being removed from the investment banks. Come the end of the month, the play money will drop another 100 billion to 150 and at the end of August it will drop to under 100 billion. Come October, it will be removed to basically zero and they will have to play with their own money. Now this information has done nothing for us as far as a leading indicator, as the markets have screamed higher the last two weeks. This may be the reason for the rush to get the indexes as high as they have in such a relentless fashion. But I have no evidence of that and just something I am thinking about.
We should be finishing wave 5 of A and a pullback more than 5 points and last more than 2 hours should hit the tape. How far and steep the decline goes is tough to say. Many are banking on a shallow pullback and then a run for 1050. I am not going to fight that if the technicals start throwing off buys signals during the pullback at support levels. But a move down to the 930-920 area would fit pattern. If a major top is forming, then we will adjust. The market has put any bear out there in a very defensive situation, like it always does.
Bottom line: The indexes continue to ignore the sell signals on every chart and are giving us nothing more than a few hours of a pullback. We should finish wave 5 Tuesday and a larger pullback should follow.
