Jack Steiman, On Consolidation Ahead of Next Upmove (SwingTradeOnline.com)

It's important for markets to consolidate a strong move whether that move was higher or lower. When you get a quick move up such as we had, you get some very overbought short-term, 60-minute oscillators. These short-term charts tend to unwind their oscillators fairly quickly once they get oversold or overbought. This last move up caused some very elevated MACD's, stochastics and RSI's. The inevitable move lower had to come and Monday we saw a drop of that take place late in the day. Nothing much to talk about although it should sell a bit more. Unwinding can take place with more of a lateral move.

It doesn't have to be a strong move lower and although you can never say never, I don't think we'll see anything too terribly hard to the down side as things unwind. The market has a bid now that the 20- and 50-day exponential moving averages have been taken back by the bulls. It's always more fun when things go straight up if you're long such as we are here. However, let me remind you that some selling is healthier than not because if you stay too overbought for too long, the move lower will be much harder and occur much more quickly without much warning at all. When you don't receive much warning the tendency is to react more emotionally which almost always results in a poor exit price. This is fine just the way it is and some additional lateral to down side action would be ideal.

The banks and financials held up very well Monday, which was necessary for the bulls since many other key areas of the market did not hold up nearly as well, from technology stocks to commodity stocks along with a few other key areas. The market continues to find a way to move money around to hold things up instead of it flying out of the market completely. This has been a trend overall since the March 2009 lows. Every attempt to bring the markets down has found rotation except when we finally had our one correction. Everything in between has been one of rotation and not a mass exodus out of equities.

If we study the market carefully we see something interesting has taken place since this latest rally from below the 20- and 50-day exponential moving averages began. Instead of money flying into the old guard leaders such as Apple (AAPL), Amazon.com (AMZN), Google (GOOG) and others, it has rotated out to stocks that under performed before that rally. These leaders were up on a high pole and need to rest thus their relative under performance over the last many weeks. The stocks that were killed and formed divergences at the bottom of their wedges have been bought up.

This is great behavior because if the market rally is led by the same old guard and the rest of the market doesn't participate nearly as well, the rally is doomed to fail. Here we see a nice catching up from stocks that didn't do so well when stocks like AAPL were up every single day no matter what type of market we were in. Again, solid behavior and thus suggests we should go higher again.


Mike Paulenoff, On a Stabilizing Euro Positive for Gold & Oil (MPTrader.com)

Normally, when the euro gets hit so hard that it drops below its 200- 50- and 20- day exponential moving averages, usually gold will look the same way. Gold, however, didn't follow suit this time. Instead, on February 5, gold hit a low right at its rising 200-day and didn't break it, rallied from it, and is now consolidating above both its 20- and 50-day.

So the chart is telling us that something is going on in gold that could be extremely positive, and something going on in the euro that could stabilize it for a while, which could be very positive for gold. The likelihood gold could take off is enhanced by the fact that the euro may be turning up for a relief rally.

What would cause a relief rally? I've been reading that the Greeks are coming to the market with a bond auction this week, which will be a litmus test to see if that bond can be sold or if there is any demand for the bond or any confidence at all in the Greek financial fiscal monetary situation and in the Greek government itself.

Any positive news could lift the euro, which looks ripe for a recovery rally that could get to 140. With it currently trading at 136, then we're talking about a rally of 3 percent. In turn, gold could move more sharply, towards to its December high above 1200.

To put an exclamation point on gold, let's look at oil, which has been going up at even a faster rate than gold. While gold bottomed on Feb 5 and has gone up 8 percent, oil also bottomed that same day at 69.86 and hit a high on Friday at 80 and change, which is around a 15 percent high.

At the same time the dollar has been going up as well. It's very strange but unique to see gold, oil, and the dollar going up at the same time. When gold and oil are going up in tandem it can mean several things, usually related to geopolitics. Oil could be headed back up toward its October and January highs at 82-84, and gold is probably heading higher as well, possibly to 1160 and maybe 1200.

Now, maybe for the next week to 10 days, the euro if the technicals are right should stabilize and actually be friendly to gold and oil.


Gary Dean & Mel Hickerson, On Fight Between Bulls & Bears (MarketsPath.com)

Gary Dean: Watch for the fight between the bulls and bears to start to heating up some more in this area. Chop is to be expected until one side is declared the winner.
The bears need to take the SPX below the 1106-1104 zone and bulls need to take the spx above the 1112-1113 zone to be declared winners.

The futures are fairly flat at the open, but that is after dropping 11 points from the highs in overnight trading. But the bears still have yet to drop the SPX futures below the major pivot area and make it stick to have some bulls running to hit the sell button. As much as the bears have failed to get the ball rolling on the downside, the moon target bulls are finding trouble locating buyers in this area. That is interesting, as the spx is still almost 40+ points below the January highs. If target is moon, why are buyers so cautious about buying the tape in this area?

From what I am seeing, the next leg down should be to the downside. If we see the bulls mount up another attack, it should just be the completion of the wave 5 and a much deeper pullback or retracement should follow. So whether or not we need to see the SPX make a move for the 1118-1120 area or not, the next leg down should be in the 30-50 handle range.

Mel Hickerson: It was another low volume, low range, low volatility session, typical of topping patterns. We painted an inside day, a doji, and a very narrow range day. All of this is typical of a topping pattern. While bulls will claim that it is also typical of bullish consolidation; I am unconvinced due to the intraday action of setting the high so early in the day and having the late day sell off.

Even though everything appears to be typical of a topping pattern, we've also seen these patterns continue to power upward a few points a day for several days. So, this is a typical "seller beware" pattern.

One item of warning to bears: Until today, the market breadth during this upswing has been stunning. Today's breadth was mildly negative, but we have to be alert to the heavy positive breadth and watch carefully for the possibility that this ramp upward continues longer than anticipated.

Our model continues to call for a pullback but I have to admit that I see the numbers moderating as the market essentially moved sideways today. Tuesday's session has more economic news on the agenda; Monday had none. Therefore, we'd expect more volatility. But another doji within a slightly larger trading range would not be too surprising.


Harry Boxer, On 4 Charts to Watch (TheTechTrader.com)

Despite the soft market on Monday we had a lot of stocks that did well and are highlighting some of their charts here.

American International Group (AIG) appears to have come out of a little mini bull coil it was setting up after the pop early this month. Monday's action broke it back above the 50-day moving average. It closed up 1.90, which was about 85 cents off the high, but still on 24 million shares, a nice pick-up in volume. It may have initiated a new leg up. My target on this is around 32 1/2.

Culp (CFI) has been very strong action in the last 90 days. I've seen this stock go from 7 to 17. It's been particularly strong the last few sessions, up from around the 12 range to 17. It's had heavy volume and strong technicals, and is spiking up. We're at secondary resistance up around the 17 range so you might see it back off and consolidate, but certainly a strong momentum stock with the next target around 21.25 -.35.

Green Plains Renewable Energy (GPRE) was the star of the day Monday. It gapped up after a 3-day little mini flag, popped on big volume, and closed at the high end of the range, up 2.85 or 20% today. Looking for a move that takes it toward 19-plus short-term.

Silicon Graphics (SGI) continues to be in a strong mode upward, breaking out of a little consolidation. Monday was an inside day, very quiet, with low volume, and just a 2-cent gain. Top of the channel's beckoning up around the 12 1/2-13 range, our short-term trading target.

Other stocks covered in today's video analysis are Astrotech Corp. (ASTC), China Agritech (CAGC), Compugen Ltd. (CGEN), Cyclacel Pharmaceuticals Inc. (CYCC), Integrated Silicon Solutions (ISSI), LeapFrog Enterprises (LF), Radware (RDWR), TASER International Inc., (TASR).