Thursday, February 9, 2012

AKS: More Broken Support

From February 2 on AKS:

KEY SUPPORT: 8.76-8.91

There's still possible support on a retest of the top of the Bull Flag (Purple Trendline #1-#3), which comes in today, February 3, at about 8.88. The top of the smaller Ascending Triangle (horizontal green line) also is right there, at 8.90-8.91, then there's the release of earnings low (Purple #4), at 8.76.

Bottom line: The Bulls need to CLOSE the stock back above the Big Ascending Triangle (Black Trendline #1-#3). Unless/until they do, the upside targets are not IN PLAY.


The AKS Bulls are digging themselves a hole here. 8.76-8.91 support is broken and the Release of Earnings 5% Gap Down Panic Low of 8.76 has been broken on a CLOSING basis. That "shouldn't" have gotten taken down.

The bottom of the 5-month Ascending Triangle (Black Trendline #2-#4) comes in today at 8.5565. That's next support. Yesterday's close was 8.54, so The AKS Bulls need to step it up coming out of the gate this morning and need to stop this "flush" to the downside by defending that trendline.

Everything from yesterday's 8.54 closing price, back up to Black Trendline #1-#3, which currently is at about 9.15, is resistance again. The Bulls need to CLOSE the stock back above there.

Tuesday, February 7, 2012

ARIA: Wolfe Wave Watch Update (2)

The ARIA Bulls weren't able to hold the upside breakout of the possible Bearish Wolfe Wave. The stock CLOSED back inside the pattern. That's a failed breakout, as it stands, so there's justification for The Bears to come in and short it, but they need to be mindful that there also was justification for shorting the Bearish Engulfing pattern, at Red #3, and that trade didn't work out. There's no problem with putting a short trade on in these situations; just be sure to cover the short if the market tells us that we've got it wrong.

Some technicians would say that yesterday's close is a CONFIRMED failed breakout. I don't consider anything to be confirmed until I've got some money jangling around in my jeanies. LOL. If ARIA goes down and breaks the bottom of the pattern (Red Trendline #2-#4) then gets anywhere near the target line (Red #6), then yes, it's a confirmed "Game, Set and Match" to The Bears on this particular pattern resolution.

The top of the pattern, Red Trendline #1-#3, comes in today, February 8, at 15.92. Should ARIA rally to there, within a penny or three, in the coming days, then falter, that would be additional information that at least a short-term top could be in. The slope of that trendline is +0.07250, so add that amount to today's 15.92 each session hereafter. It will be at 15.9925 on Thursday, February 9, etc.

It's helpful to look at intraday charts for clues about what's going on. For example, when The Bears shorted the Bearish Engulfing pattern, at Red #3...

...they knocked the stock down to roughly 15.37, establishing a neckline for a possible H&S Top. That looked very good for them and if they could have broken the neckline after a rally into a Right Shoulder, that would have put about a dollar of downside IN PLAY (that amount is the height of the putative H&S).

That isn't what happened. The red arrow "should have been" The Right Shoulder high, but The Bulls took that out to the upside, then more importantly, took out the 15.34 high of the Head (white down arrow) to the upside as well. Uh-oh...

That "shouldn't" happen. The Bulls got stronger, not weaker, and after they finally used the high of The Head as support (white up arrow), look out above! The short squeeze was on. The Bears had to Buy To Cover their mistake, at the breakout above the 15.34 high of The Head, and if they didn't, they got dragged almost to 16.00, and through the upside breakout of the Wolfe Wave in the daily chart.

The upside takeout of this H&S pattern in this hourly chart put about 16.34 IN PLAY because the height of the pattern is about a dollar and it broke out above 15.34. The chances of The Bulls getting to the 16.34 target, however, are somewhat diminished by the fact that The Bears CLOSED the stock back inside the Wolfe Wave pattern in the daily chart, but as we know, this stock has done some serious squeezing of The Bears in the past year.

Just laying out what I'm seeing here and trying to follow the action to see if I like something well enough to play it. Wolfe Waves "should" move rather quickly to the Wave #6 target, or thereabouts, after a Wave 5 Fakeout/Breakout, the latter of which certainly is a possibility given yesterday's close. The daily chart also looks stretched enough on the upside. It's been nearly a straight up affair off the 10.41 low, at Blue #4. A move down to/near the Wave #6 target line would be an entirely reasonable correction in the stock.

If anyone is interested in how this plays out and if I forget to post on it (I sometimes get interested in other stocks and don't follow it), remind me in the comment section sometime down the road ;)

Monday, February 6, 2012


From Jan 30, on ARIA:

"In Friday's session, The ARIA Bulls came roaring back and took out Thursday's 15.15 high of the Bearish Engulfing pattern, but closed at 14.96, so Bears using a PRINT above Thursday's high were stopped out of their shorts. Bears using a CLOSE above Thursday's 15.15 high still are okay in their short position, but Friday's action certainly wasn't what they wanted to see."

That group of Bears also got stopped out of their shorts.

This stock has a penchant for squeezing the shorts pretty badly, especially during its stellar gain of 425% into the July, 2011 top, again in October, 2011, and again currently (review the charts from January 30th).

It's fine to have shorted that Bearish Engulfing Pattern at Red #3 of this current Bear Flag, playing it for a top, but "know when to fold 'em." That obviously was not a top.

Yesterday's breakout "could be" a Bearish Wolfe Wave 5 Breakout/Fakeout, which is a hallmark of a Bearish Wolfe Wave. The Bears got squeezed on Friday when ARIA closed at 15.48, above the high at Red #3, and they got squeezed again yesterday on the upside breakout of the pattern. Some Bulls bought the breakout, too, so the proverbial "everyone" was a buyer, and if it reverses to the downside, "everyone" was a buyer at the wrong time.

If it is a Wolfe Wave, they can be tricky. There sometimes is a Double Fakeout/Breakout where the stock goes back inside the pattern, breaks out again, then finally fails and reverses to the downside. My point is, have a stop loss so that it doesn't get out of hand on the upside. ARIA is making new highs here with no overhead resistance, which can be very dangerous for short positions.

Notice that after the breakout of the last possible Bearish Wolfe Wave, to Blue #5 and the question mark, there was no sign at all that it was a Fakeout/Breakout. It simply continued higher. Anyone who shorted the last pattern breakout, which was just below 13.00, has a problem here if they didn't cover it.

"Admit as quickly as possible when a trade goes wrong, take the hit, and move on."

BXG is a thinly traded stock that has had interesting price action since we looked at it in early January. The "Handle" part of the Cup & Handle pattern broke out in late December, 2011. The "Handle" is the Symmetrical Triangle, in blue.

The entire pattern had a couple of intraday breakouts that didn't hold on a CLOSING basis and the stock got sent down, all-ll the way back to the 2.50 low of the "Handle." Yeesh. That's a lousy performance out of the BXG Bulls ever to allow that kind of pullback, but they held at a low of 2.54, above the 2.50 Symmetrical Triangle low, and "they're baa-ack" near the top of the pattern.

A breakout suggests something slightly north of $4.00. The steady decline from the $4's in the first half of 2011 is resistance all the way up on a breakout, so this "extra" base-building here isn't all bad if the Bulls eventually can break it out.

It's certainly an unorthodox Cup & Handle! A takeout of 2.50 and 2.54 support would suggest a retest of the lows.

Saturday, February 4, 2012

BIDU: Double Nested Inverse H&S

After the breakout of the Double Nested Inverse H&S pattern that we looked at earlier in the week (there's a self-contained Inverse H&S pattern in the Left Shoulder, in white), BIDU took off to the upside and headed toward the target of roughly 134 that went IN PLAY (For the target, take the height of the BIG pattern, roughly 7 points, then add that amount to the breakout point, roughly 127).

As we know, multiple patterns/nested patterns can pack some punch when they break out or break down, strictly based on the technicals, but any news on the fundamentals "can" trump the technicals. Watch the REACTION to the fundamentals. The inital reaction usually is an emotional, subjective response, and sometimes can be very misleading.

In this example, BIDU announced that the release of earnings would be delayed and reported at the end of February instead of at the end of January, which was when the market expected the report.

Uh-oh..."the market doesn't like uncertainty." The delay causes worry. "What's wrong?" "Why are they late?"

Anyone who didn't want the worry, and who sold, did fine. That's a nice play: "Gimme the money...I don't want the headache!" They caught some of the gain on the breakout, and BIDU did sell off on the news and retested the breakout. The Bulls got handed "Ye Olde Knuckle-biter" when BIDU sold off below the breakout, putting it's validity in question, but BIDU didn't tank, nor did it take out the low of the Right Shoulder, which would have been cause for more serious concern.

"Right Shoulder lows 'shouldn't' get taken down." (The reverse for H&S Tops).

Instead, the BIDU Bulls stood firm, just below the neckline of the Double Nested Inverse H&S neckline, while the "selling on disappointing news" transpired. They also used it as an opportunity to put in a Double Bottom, which they broke out of on Thursday morning, so they now had a Double Bottom breakout giving added strength to the initial breakout the Inverse H&S. There was a pullback to the Exponential Moving Averages (EMA's) after that breakout, then The Bulls rallied it to a new high on the session then left it parked at the close near the highs at the session, "poised to go higher" to the 134.00 target IN PLAY.

Friday morning was a Breakway Gap Up opening with very little gap fill. The BIDU Bulls stampeded to the upside and the (roughly) 134.00 target got MADE in a runaway.

The disappointment about the delay of the release of earnings only was temporary. There was no technical damage done the chart on the "bad news" selloff. It would have been a much better performance if they had held the neckline and NOT put players through "Ye Olde Knuckle-biter," so their scores get marked down for that, but The BIDU Bulls did score the 134.00, which the power-packing Double Nested Inverse H&S pattern had indicated, so there you have it.

Scores For Technical Merit:

10...10...10...10...10....10 (they got their target)

Scores For Artistic Performance:

5...5...5...5...5...5...5... (knock it off with "Ye Olde Knuckle-biter," dang it!)

Thursday, February 2, 2012

AKS: Ye Olde Knuckle-Biter

From January 31, on AKS:

"As long as AKS holds the FOUR upside breakouts, it looks fine. If AKS should CLOSE below the big Ascending Triangle trendline (Black #1-#3), which currently is at about 9.18, that would be cause for concern..."

Well-ll...that's too bad. AKS closed at 9.04, below that trendline breakout of the big Ascending Triangle, so it's "Ye Olde Knuckle-biter" for the AKS Bulls, leaving them wondering whether or not they've got enough game to take the stock back above the breakout.

I bought AKS for 8.97 in mid-January when it went back below the breakout and retested the smaller Ascending Triagle (horizontal green line). That support held and it went back above the breakout again. At the release of earnings, AKS tanked 5% at the open, to Purple #4 of the Bull Flag, but CLOSED back above the Ascending Triangle, so I held it. I would have sold any close below Black Trendline #1-#3, regardless of what the earning were. I only look at the RESPONSE to earnings, and I liked that quick recovery on earnings day and the BIG up day on January 25.

But, now it's back below the breakout? No, thank you. That's too sloppy for my taste. That's enough of a concern for me that I don't want a position it, although I might trade in it later on.

KEY SUPPORT: 8.76-8.91

There's still possible support on a retest of the top of the Bull Flag (Purple Trendline #1-#3), which comes in today, February 3, at about 8.88. The top of the smaller Ascending Triangle (horizontal green line) also is right there, at 8.90-8.91, then there's the release of earnings low (Purple #4), at 8.76.

Bottom line: The Bulls need to CLOSE the stock back above the Big Ascending Triangle (Black Trendline #1-#3). Unless/until they do, the upside targets are not IN PLAY.

Purchased at 8.97.

Sold in after hours for 8.98-9.00 for a break even.

Wednesday, February 1, 2012

AMZN: Earnings

After successfully retesting the Falling Wedge breakout on January 13, AMZN broke out above the Ascending Triangle (in blue) to 195.94, came back and successfully retested the top of the Ascending Triangle, rallied to 196.50 and was parked just below there at the release of earnings.

As we know, the release of earnings always is a wild card. Anything can happen. In my view, the earnings don't matter; it's the REACTION to earnings that matters.

AMZN currently is called gap down, in the $174's, so it's obvious that the REACTION to the release of earnings is very poor. The $183's...$184's were Key Support since that was the Ascending Triangle breakout and the successful retest thereof. AMZN is getting whacked, well below that. The Gap Down also completes a Double Top, at 195.96 and 196.50, which puts a target of 170.46 IN PLAY, so AMZN almost will be there at the open.

Double Top:

195.94 - I use the more conservative of the two highs. Using 196.50 is fine.
183.20 - The pivot of the Double Top, or "M" Top

195.94 - 183.20 = 12.74 points of downside from the breakdown

183.20 - 12.74 = Target 170.46 IN PLAY

The $183's-$184's now are horizontal resistance again.

Tuesday, January 31, 2012

AKS - Morgan Downgrade

Analysts' calls on stocks can be confusing and can be very right, or very wrong. Earlier in the month Credit Suisse put a price target of $12 on AKS to which Cramer gave a rather grim, ominous response, referencing Bethlehem Steel (comment on chart). Cramer could end up being very right in the end, but the market's RESPONSE to the Credit Suisse call was to break the stock out of a five month base to the upside, to 9.96 (Purple #1 of the Bull Flag), so for the time being, Cramer's remark wasn't enough to reverse the breakout.

Yesterday, Morgan Stanley downgraded AKS from overweight to equal weight, with a price target of $14. That's a bit confusing because the word "downgrade" gets the headline, but Morgan liked it on June 9, 2011 when it was trading in the $14's (it fell to $5.51 in October, 2011), and now they're "downgrading" it to equal weight, but they have a target of $14, which was that price of the stock when they liked it last summer. Bottom line: Morgan's downgrade seems much ado about nothing.

As long as AKS holds the FOUR upside breakouts, it looks fine. If AKS should CLOSE below the big Ascending Triangle trendline (Black #1-#3), which currently is at about 9.18, that would be cause for concern, and if AKS should take out the 8.76 low of the Purple Bull Flag, that would be a bigger concern. That 8.76 low was an initial 5% drop in the stock in response to the release of earnings, but AKS rebounded smartly and rallied to a new recovery high of 10.33 two sessions later. That 8.76 low "shouldn't" get taken down, at least not before the targets in the $10's get MADE, at a minimum.


9.18 - The top of the Black Ascending Triangle (Black trendline #1-#3), which has a downward slope of -0.00312, so we "move the chains" downward a tad each session.

8.76 - The release of earnings low, which also was the Bull Flag (in purple) low.

As the chart stands, it still is broken out to the upside and still is intermediate-term bullish.

Monday, January 30, 2012

ARIA: Reversals And Confirmations

ARIA put in a Bearish Engulfing pattern on Thursday at the top of a "possible" Bear Flag, so "possibly" a sign of some kind of top. In a situation like this, some players will go ahead and short it with a stop of either a PRINT above the high, or a CLOSE above the high. Either of those is fine for a short, if anyone wants to do it. It's a low risk entry unless the stock has a big gap up, but that risk exists when shorting ANY stock.

Some players will wait for further confirmation, like a break of the putative Bear Flag, or even a break of the Bear Flag, then a failed retest for additional confirmation that the chances are very good that some kind of top is in, an example of which we'll look at in a moment.

The December 2 candle pattern at Blue #2 in the Channel was a Bearish Engulfing pattern, similar to the one on Thursday, January 26. That one turned out to be a short-term top. The high was 12.50 and the stock sold off to 10.41.

Now look at the September 21 top, at 10.71. That one had several confirmations of a short-term top:

1. The stock had broken out of an Ascending Triangle to the upside, but September 21 was a Reversal candlestick. It made a new high for the move, then closed back inside the pattern AND closed below the prior session's low, closing at 9.97. That's nice initial confirmation. For a short trade, use a PRINT or a CLOSE (trader's choice) above the 10.71 high as the stop loss.

2. ARIA bounced off the bottom of the pattern and rallied back to the top of the Ascending Triangle and, although The Bulls managed to poke their heads through it by a tad, The Bears did their job and knocked it out of there by the close, still inside the pattern (red arrow).

3. Two sessions later, The Bears broke the bottom of the Ascending Triangle AND took out the recent 9.27 low (green arrow). More confirmations.

4. The next session, The Bears only allowed The Bulls to get to 9.30, a hair above the 9.27 horizontal resistance, then took it down. That was confirmation of a failed retest of former support, which now was resistance as it "should be."

The final low for that move off the 10.71 high was 7.72, just about half way between the last two lowa of the Ascending Triangle (8.13 and 7.55). That's about what one would expect on a broken pattern like that. Some kind of retest of the low, but a stock doesn't always go all-ll the way back.

The next session was a Bullish Key Reversal: a new low for the move, then a close higher than the prior session. That two-day reversal pattern suggested that Bears had jolly well had it as far as taking the stock down. Bears who didn't cover their shorts on that reversal got squeezed to the upside. Badly.

In March of last year, ARIA had enjoyed a big percentage gain and had put in an ominous looking Gravestone Doji Star Hangman AND a possible Double Top at 7.32... 7.30. The Bears felt that it was a reversal candle and that it was a great shorting opportunity, and sometimes they are...

...but, it wasn't. The shorts got squeezed some more, into ANOTHER Gravestone Doji Hangman. That gave The Bears hope that maybe their misery finally was over.

You know what's coming, don't you? LOL.

UGH. That wasn't a top either. The top didn't come in until the stubborn Bears nearly were squeezed half to death, and that has much to do with the nature of parabolic rallies. The shorts won't let it alone and, at least in part, margin calls force them to capitualte and "Buy To Cover" forcing the stock higher and higher until some of them are knocked out of the game entirely.

"Know when to fold 'em!"

Shorting a "possible" reversal candle, or "possible" reversal pattern (like a two-day Bearish Engulfing pattern) is perfectly alright and sometimes we get rewarded for doing it, but if the high gets taken out, as in these examples, admit as quickly as possible that our thesis for shorting is blown, take the small hit, and don't allow a trade to turn into a horrible disaster like this. DOUBLE UGH.

As is usually the case with parabolic rallies...

... they don't end well. ARIA finally topped out and had a Parabolic Return to the origin of the rally, and slightly below it, which often is what occurs. There's no base-building on the way up and the plunge often is equally dramatic on the downside. Greedy Bulls who don't take profits watch their stellar gains evaporate. We looked last week at a much more stunning example of that in AK Steel (AKS), if anyone wants to scroll back and review it. The stock had a Parabolic Return from $73 to $5.

In Friday's session, The ARIA Bulls came roaring back and took out Thursday's 15.15 high of the Bearish Engulfing pattern, but closed at 14.96, so Bears using a PRINT above Thursday's high were stopped out of their shorts. Bears using a CLOSE above Thursday's 15.15 high still are okay in their short position, but Friday's action certainly wasn't what they wanted to see.

Saturday, January 28, 2012

BIDU: Heading Into Earnings

BIDU's Friday morning Gap Up opening and strong move higher looked like "The Tell," suggesting that the mid-week take down of the bullish Inverse H&S pattern was a Bear Trap, as I suspected, and that BIDU finally was going to move higher off the Channel breakout that we've been looking at in the daily chart.

This Symmetrical Triangle looked lovely. Both the top and bottom had been validated as resistance and support (the white arrows) and, forming after the big move up off the opening, it "should be" a bullish continuation pattern that resolves to the upside.

Given how sloppy The BIDU Bulls have been since the Channel breakout in the daily chart, and given the fact that I've been "paying up" for BIDU most of the week, I wanted the perfomance that I was paying for, and no nonsense. I wanted to see this pattern breakout and GET GOING, dang it!

I bought 2,000 BIDU at 126.00.

UGH. She broke out...then was back in my face for "Ye Olde Knuckle-biter," back below the breakout, just like she's been doing in the daily chart since the Channel breakout. I had had enough of that nonsense.

I had "paid up" for the stock and didn't have any room to find out if it was a fakeout, or not, so I threw it in for a small gain, at 126.04. I thought that I had a good read on "The Tell," but I wasn't willing to pay to find out.



You have to have a sense of humor in this game. As good as my read of "The Tell" was, Ms. Market got me gooood on that one! I would have been fine if I hadn't fine-tuned it with the 1-Minute chart, but this stock moves very quickly and I didn't want to get caught in a quick downdraft. Oh, well...

As much as I would have liked to have had it, I'm not going to chew myself out for missing it. I've sold plenty of times on trendline violations and on "Ye Olde Knuckle-biter" and have been rewarded for doing it, so that's the breaks. I will say, though...

Curses! Curses! CURSES!!!

Here's "THE TELL:"

1. The Bullish Inverse H&S broke out to the upside, but it was a Fakeout/Breakout. Bulls who bought it were disappointed. Bears who bought to cover their shorts were disappointed. The proverbial "everyone" got busted.

2. The low of The Head got taken down at the first red arrow. That's usually bearish, but it was a Fakeout/Breakdown. Bulls who sold the breakdown and Bears who shorted the breakdown (both very reasonable plays) got busted again because the takeout low got successfully retested (second red arrow), and the stock went higher.

3. After The Bulls broke out of the Ascending Triangle at 123.50 on Wednesday and the target of 125.00 got MADE (see that chart back on Wednesday), BIDU opened down on Thursday and went through 123.50 like a knife through butter. Look where it stopped going down: 122.83 (horizontal yellow line). That was a successful retest of Wednesday morning's 122.84 Gap Up high (yellow down arrow), then BIDU raced higher, to 127.21. That looked like the "real move," enticing Bulls to buy again and Bears to buy to cover again, but it wasn't, and they both were disppointed again as BIDU moved down ... down ... down on Thursday afternoon.

When BIDU opened gapped up on Friday and raced higher, that looked like "THE TELL," that the "real move" was about to unfold, which is why I got long at 126.00 (orange arrow), but I got disappointed along with "everyone" else after I threw it in, questioning my read, then later saw what unfolded. Wow!

The "real move" was a much larger Bullish Inverse H&S breakout, packing plenty of power!

It turns out that the initial Bullish Inverse H&S (in yellow) was a "fractal" (repeating pattern) that formed what became the Left Shoulder of the much larger Inverse H&S (in white) that was to come.

Great example of how charts can "morph," or change, into something else as they unfold. It's also a great example of how Ms. Market will disappoint the greatest number of people possible with all of those fakeouts, prior to the "real move" out of the BIG Bullish Inverse H&S.

So-o, after the sloppy breakout of the Channel, back and forth above and below the breakout, BIDU powered higher into the release of earnings, which is slated for Monday, according to Yahoo Finance (check me on that). That's always a "wild card." As nice as the chart looks, the bullishness always can be trumped by a poor response to earnings.

On a pullback, The Bulls "should" defend that neckline of the BIG Bullish Inverse H&S pattern in the last chart.

Gain: a paltry $75, but I earned every penny of it trying to figger this one out! LOL.

Friday, January 27, 2012

FCX: Long-Legged Doji Star Hangman

From January 1st, on FCX:

"FCX finished 2011 breaking out of a Channel, successfully retesting the top of it on December 28 and 29 and moving a tad higher into the final gong for the year...

Key Resistance:

Level 1 - 41.20 - 41.45 (the August lows, prior to the second Crash in the stock)

Level 2 - 46.06 - 46.20 (the lows of the early 2011 BIG Falling Wedge)"

FCX has had a smart rally off the validation of support that we discussed back at the end of 2011. The stock has made it to, and through, both levels of Key Resistance that we examined.

Yesterday's session is a Long-Legged Doji Star Hangman the 48.96 high of which got close to the Symmetrical Triangle target of 49.28 that went IN PLAY off the Symmetrical Triangle breakout in early January. That candlestick "can be" a sign of a reversal and some pullback in a stock, especially after such a nice rally, and especially now that FCX is into the 2011 Falling Wedge resistance. At yesterday's high, FCX was up 70% of the early October, 2011 3-Close Bullish Key Reversal. Excellent rally!

Notice the two Gaps Up in October. Those came shortly after The Smackdown from the 2011 Falling Wedge breakdown and both got filled rather quickly, in November. Lots of willing sellers on that first rally attempt into resistance.

Notice also that the December 30 and January 10 Gaps Up have not been filled. In the autumn, we discussed the facts that (1) after a big Smackdown like FCX had, it would need time for some base-building, and (2) the stock likely would have difficulty making upside progress due to year-end tax loss selling. Once the tax loss selling was over with and a decent base had formed (the Symmetrical Triangle), FCX had a much better chance of a rally, as we've witnessed in January.

Bigger picture, FCX has rallied into the thick of the 2011 Falling Wedge resistance. Interesting that it nearly ran the gamut of the narrowing top and bottom of that wedge in yesterday's trading.

Viewed in the context of that big overhang of sellers, yesterday's Doji Star candle makes a lot of sense. Bulls who have been trapped inside the Falling Wedge and who sat on fairly sizeable losses during The Smackdown were saying things like, "Omigawd, I finally have a chance to get outta this thing at a break even. SELL!!!"

Additionally,some of the Bulls who have a nice gain from the recent rally began to take profits when they saw yesterday's rally fading.

Bullish news could cause the stock to pound its way right through all of that 2011 resistance to the left of the chart, but strictly based on the technicals (the overhang of sellers), that isn't likely. After a 70% run-up into this kind of substantial resistance, a selloff or some backing and filling would be more likely, and much healthier, technically.

Thursday, January 26, 2012


The December 19 validation of support at the bottom of the Rising Wedge earned US Steel (X) a rally back to the top of it yesterday, and in the process, the October 27 Ascending Triangle target of 30.71 got MADE, within five cents. The session high was 30.66.

From yesterday morning on AKS:

"The early selloff accomplished two things: (1) it filled most of the gap left in the chart from January 9, and (2) it estabished White Data #4 for yet another possible bullish pattern, a Bull Flag (the pattern in white), which is the pattern in purple in the next (daily) chart."

Yesterday, on the strength of the three pattern breakouts that preceded it, AKS had a FOURTH upside technical breakout to a recovery high of 10.12, so the bullishness of the nearly six month basing period and recent breakouts is being borne out.

The Bull Flag (pattern in purple) broke out yesterday crossing 9.33, so the upside targets are: a retest of the 9.96 pattern high (that got MADE yesterday), and 10.53, which is the measured move off the breakout.

9.96 - pattern high
8.76 - the release of earnings Fakeout/Bear Trap low

9.96 - 8.76 = 1.20 points on the breakout above 9.33, which is where purple trendline #1-#3 was yesterday when the stock broke out.

9.33 (breakout point) + 1.20 points = Target: 10.53 IN PLAY

That target just is what this particular pattern suggests. The pattern doesn't "know" what the chart looks like, so it must viewed in context of the entire chart. We can see that there is no nearby overhead resistance, so the stock has a bit of open field running between here and the target(s). Shareholders who held the stock during the autumn Smackdown and who didn't throw in their shares during year-end tax loss selling have a very good chance of recovering some losses and aren't as likely to sell as they were prior to the upside breakouts.

From yesterday morning on BIDU:

"What "could be" bullish in this chart, potentially, is that the takeout of the Inverse H&S pattern is a "Fakeout/Breakdown," and that The Bulls will reverse it and race back to that critical breakdown at 123.50, which coincidentally also is where the top of the Falling Wedge came in yesterday."

Yesterday's action in BIDU is exactly the type of thing that I was looking for when I bought it on Tuesday at 122.03 and ended up throwing it in for $1,000 loss.

Curses! Curses! CURSES!!!

The Bulls threw the long bomb into resistance on yesterday's opening play, but that usually doesn't work, and it didn't. The Bulls got sent back to retest the possible "Fakeout/Breakdown" low, and they held their ground. I liked that.

The successful retest set up the stampede for 123.50 resistance that I was looking for on Tuesday. The Bulls then took out the opening high and ran directly to 123.50 exactly, which proved daunting on that first attempt.

After a sizeable pullback to the Exponential Moving Averages (EMAs), which provided support, The Bulls were baaa-ack, this time to 123.49.

Another, more shallow, pullback and The Bulls were baaa-ack again, to 123.49. That's the hallmark of an Ascending Triangle: Flat top; increasingly shallow pullbacks.

Geez, I hated "paying up" for the stock at 123.40 when I basically read it right when I bought if for 122.03 on Tuesday and took $1,000 loss, but let's try NOT to whine about "coulda...shoulda...woulda." There was enough evidence here that Tuesday's breakdown was a "Fakeout/Breakdown," so I "paid up" and bought 2,000 BIDU at 123.40. The Bulls had recovered to 123.50 and were building an Ascending Triangle pattern from which to launch a rally.

Game on!

There's the Ascending Triangle breakout, which put an upside target of 125.00 IN PLAY.

123.50 - high of the pattern
122.00 - low of the pattern

123.50 - 122.00 = 1.50 points of upside on a breakout

123.50 + 1.50 = Target: 125.00 IN PLAY

Note: Look at that Bull/Bear struggle right at 123.50 (horizontal red line) at the top of the Ascending Triangle, prior to the breakout. Some serious head banging, eh?!

Given how sloppy The BIDU Bulls have been, and given the VERY nearby resistance (yellow circle), I didn't stay for the 125.00 target. I sold my 2,000 shares for 124.45.

The 125.00 target ended up getting MADE. BIDU closed right near that at 125.05 after The Bulls scored a session high of 125.52.

Gain: $2,100

Wednesday, January 25, 2012

AKS: Earnings; BIDU: Break Below 123.50

The market's initial response to AKS's earnings was a panicky selloff of nearly 5% in the first few minutes of trading, back below the upside technical breakouts in the daily chart (below), but that didn't last long. The stock climbed off the lows and closed back above the breakouts and near the high of the session.

Unless the market changes its mind and sends AKS back below the breakouts on a closing basis, AKS has survived the release of earnings.

The early selloff accomplished two things: (1) it filled most of the gap left in the chart from January 9, and (2) it estabished White Data #4 for yet another possible bullish pattern, a Bull Flag (the pattern in white), which is the pattern in purple in the next chart.

As the daily chart stands, the upside targets still are IN PLAY as long as the stock continues to CLOSE above the breakouts.

From yesterday, on BIDU:

"The yellow line, by the way, is the Right Shoulder of the Inverse H&S pattern in the last chart. That 123.50 low "shouldn't" get taken down. The late session low was 123.50 exactly."

The BIDU Bulls have been as sloppy as this chart looks, and it has cost them.

When the low of a Right Shoulder of a Bullish Inverse H&S gets taken down (that's the top horizontal red line), that's a second "shot across the bow" from The Bears because, as i said yesterday, that "shouldn't" happen (the first shot across the bow was The Bears taking the stock back below the neckline).

The takeout of the Right Shoulder low suggests a test of next support, which was the lows of the Symmetical Triangle, in green (the middle horizontal red line), and if that breaks, a test of the low of The Head (the bottom red line). The Bears scored on all three of those support levels, taking them all out to the downside. UGH.

When there's absolutely nothing bullish to recommend a chart, I like to try to remain objective and to look for something that is bullish. What "could be" bullish in this chart, potentially, is that the takeout of the Inverse H&S pattern is a "Fakeout/Breakdown," and that The Bulls will reverse it and race back to that critical breakdown at 123.50, which coincidentally also is where the top of the Falling Wedge came in yesterday.

I wanted some evidence, though, that The Bulls at least had a chance.

Well-ll, the stock didn't tank after the takeout of The Head, and The Bulls broke out of this little Bull Flag. Hmmm-mm...

There was plenty of time still on the clock. The Bulls had a chance here if they could successfully defend the top of this Bull Flag on a pullback, then start climbing back to the 123.50 breakdown. I bought 2,000 BIDU at 122.03 on the pullback. The Bulls either had game, or they didn't, and I'd soon find out.

Curses! Curses! CURSES!!! Weak-kneed, lily-livered Bulls! LOL.

The Bull Flag breakout was an obvious failure, so I threw it in on the little bounce back to the top of the flag (white arrow), in the 121.50's.

That's a shame. The session high was 123.40, below the 123.50 low of the Right Shoulder in the intraday chart, and right at the 123.389 top of the Channel in this daily chart. UGH. The Bulls have dug themselves a bit of a hole and need to get back above there.

Loss: $1,000

Tuesday, January 24, 2012

BIDU: Back Above The Falling Wedge

From the weekend on BIDU:

"The first order of business for The Bulls on Monday, January 23, is to: (1) get back above 123.02-123.05 resistance, (2)then the top of the Channel, which will come in at 123.808 and, (3) then knock out Friday's high of 124.54, which would trigger a repeat Buy Signal from the 13/21RSIs and the 21/34RSIs."

Bang! The Bulls came out of the gate at the opening gong and scored all three objectives in the first minute of trading.

I was wanting more of a pullback to get long, but when The Bulls took it higher, I placed an order for 2,000 shares at 124.35.

No luck with that. BIDU rallied almost to 126.00, so I cancelled the order. I accepted the disappointment with my usual dignity and aplomb.

Curses! Curses! CURSES!!!

Back to the drawing board. Sigh...

At this juncture in the session, The Bulls were looking like they wanted to make another bid for the highs. The lows here were right at the 124.54 "Buy Pivot" which had been triggered by the RSIs and, basis the 5-minute chart that we'll look at in a minute, there was an Inverse H&S forming. I bought 2,000 BIDU for 125.06.

Little upside breakout here, to the neckline of the Inverse H&S.

An attempt at a breakout, but then a pullback to retest the top of the little Ascending Triangle. That's fine, but GIT GOING. I had "paid up" for the stock and I wanted results. I wasn't much for "Ye Olde Knuckle-biter."

Oh, geez. A nice breakout with plenty of open field running available, but The Bulls buckled and allowed The Bears to take the stock back below the neckline for "Ye Olde Knuckle-biter." UGH.

Another breakout above the neckline...then ANOTHER "Ye Olde Knuckle-biter." I had a paper gain of well over $3,000 on the breakout. "Maybe" the little Falling Wedge (in white) was going to breakout to the upside, but this was so sloppy, "maybe" the danged thing was going to come back in my face. I had had enough of weak-kneed Bulls and decided to TAKE THE MONEY. Sold in the 125.60's.

Sloppy play sometimes turns out alright, but this H&S Top that The Bears put in is good example of what can happen if/when upside breakouts get sloppy. At the white arrow, The Bulls failed to get through the broken neckline, validating the H&S Top breakdown, and down she went.

The yellow line, by the way, is the Right Shoulder of the Inverse H&S pattern in the last chart. That 123.50 low "shouldn't" get taken down. The late session low was 123.50 exactly.

Despite the sloppiness from The Bulls, technically, they stuck the close slightly above the upper trendline of the Falling Wedge, but they need to do something better than that.

Gain: $1,100