Mike Paulenoff, On Strength in Treasuries, Caution on Equities (MPTrader.com)
Something about today's action in the equity indices and sectors is making me averse to looking for and/or considering entry into new long positions. Maybe it is because it is Tuesday (Turnaround Tuesday)? Or maybe because it is another quiet August session that fails to exhibit any selling pressure after a near-vertical advance of over 6%?
Another thing that bothers me (about the equity market strength) is the relatively strong price action exhibited by the iShares Barclays 20+ Year Treasury Bond ETF (TLT). Despite much better than expected economic data released this morning and despite continued indigestion from ongoing U.S. Treasury auctions, the TLTs act well and have NOT given back much of yesterday's strong upmove. Perhaps Bernanke's reappointment has something to do with the strength of the bond market? Then again, if Bernanke is viewed as the Master Quantitative Easer, then why wouldn't the bonds and TLTs actually be under intense pressure today?
Needless to say, something is a bit curious about the relatively strong showing of the TLTs, which apart from my bullish near-term technical work (see chart below) certainly has me intrigued. That aside, the fact that the TLTs are consolidating between 95.40 and 94.90 is a very constructive sign that additional upside will be forthcoming after the current digestion period runs its course. A hurdle of 95.60/90 should unleash a thrust to 98.00 and then 100.00. Only a break below 94.40 will begin to compromise the timing of the anticipated forthcoming upmove.
Gary Dean, On Why Monday's High Could Prove Significant (MarketsPath.com)
On Monday the indexes moved up at the open and the spx made it right to the middle of our target zone. With the dow about to hit our monthly pivot as well as a resistance pivot, we jumped on the S&P 500 SPDRs (SPY) put trade and walked away with a 16% gain in a few hours.
Let's go over a few reasons why Monday's high COULD mark an important high. Whether it is short term, intermediate or long term is uncertain.
1) The turn date was triggered today at 12:00 and the top came in at 11:10. Not too far off.
2) The Dow reversed right at the monthly pivot with sell signals on the rsi
3) Nobody will be anticipating the top being in, so it would catch a majority off guard.
4) The DSI sentiment registered an 89% bullish reading Friday. The last time we saw that type of reading was June 2007.
5) Each index supports a clear 5 wave pattern from the July lows and made new highs today. By Elliott Wave principals, that is all that is needed to complete the upside pattern.
Even if we are just making a wave 4 down which will be followed by a wave 5 to new highs, we should at the least another 5 wave move down to the 1015-1005 level.
Bottom line: The indexes look like the formed a short term top. We should see another 5 wave move down once the wave B up completes. I am giving the longer tern top a 50% chance right now.
For Tuesday: If we see early strength, watch the 1028-1030 pivot zone as a place we could see the next leg down start. Early weakness should find dip buyers at the 1020-1015 area.
Harry Boxer, On the BioCryst Pharmaceuticals (BCRX) Chart (TheTechTrader.com)
Today we're featuring BioCryst Pharmaceuticals Inc. (BCRX), which had a significant move Monday as well as several others in that group. The daily chart shows a solid uptrend in place since the March low when it was trading at 1.00, that has taken it to 11.00 and change area. Then the stock coiled or formed an ascending coil holding the moving averages. On Monday it broke out nearly 8.8 million shares, up 2.55, near the high for today going away, leading us to believe there's more to go. I expect a move that takes us to the 14.00 - 14.50 area over the next day or two. Possibly, if it really gets going it could get as high as 17.50 - 18.00 zone, which is my intermediate target.
The 1-minute chart shows that mid day was very quiet. The government announced that they were going to try to fast forward some of the vaccines, and the stock then exploded from around the 9.85 area, jumped up to near 11.00, then backed and filled in a kind of a flag type pattern, then extended, broke out again and ran from about 10.83 up to about 11.65, went sideways for about an hour a half, broke out in the last 40 minutes, and surged from about 11.22 up to 12.60 -12.65 area right where it closed. In the aftermarket it traded steadily higher around 12.70.
So, BCRX had a significant move Monday, a strong price-volume surge on heavy volume, breaking out of a four-week coil, and we'll see if we can get an extension on this over the next couple of days, but it certainly looks like the price-volume surge that occurred today could trigger a more extensive move. There is a top of the channel type resistance around 14.50, which is my short term target anyway, but beyond that if it does accelerate it may make it higher, perhaps up 17.50 - 18.00 zone.
Jack Steiman, On Red Flags to Watch (SwingTradeOnline)
The bears have a daunting task in front of them. On the Nasdaq, we have gap support at 1994 followed by the 20-day exponential moving average at 1973.
Again, a lot of strong support not far below current price. One thing the bears can hold onto is that the daily charts, especially the Nasdaq, although all of the major indexes fall into the same category, have strong negative divergences now at very high levels.
This is the real sticking point for the bulls going forward right now. Upside action may be more difficult to sustain, even though we will likely see lots of back and forth action.
What's really relevant about today's action is not the fact that we reversed, but who did the big time reversing. The leading stocks in the leading sectors gave it up. Most of them are on high poles with negative divergences on their daily charts. Makes things really scary getting too involved for too long. It's more an in and out trading scenario for now. You don't want to overdo your stay in any of these leaders, such as Apple Inc.(AAPL) Nadaq, Research in Motion (RIMM) Nasdaq, Google Inc. (GOOG) Nasdaq, Biadu, Inc. (BIDU) Nasdaq, and the commodities across the board today. The financials also reversed massively late and although it may be nothing more than a one time event, you have to monitor it closely in case it is more than just a fluke, if you will. The leaders led down today on strong reversal sticks and they will have to be watched very closely in the days ahead, especially when they rally back up. Will they negate those poor divergences or simply create bigger ones, and not just on the daily charts but on the 60-minute time frame charts as well.
We have had some exceptionally low put/call readings over the past two days and although this isn't necessarily meaning the end to the rally, we have to take note of such an event. Including Friday, we had 16 consecutive readings in the extreme complacency category. It finally moved up a drop as the day went on today once we sold, but it is something to watch for complacency can happen out of nowhere and we're starting to see it on the put call readings lately. Another red flag to watch out for. Too many more readings like we've seen the past few days and the market could be finishing up the rally off the bottom. Some fear if we sell some would be nice if you hold a bullish tilt.
