VPHM: Ahead Of Earnings

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VPHM will report before the bell. Conference call at 9AM. Chart #1 takes us back to last summer when VPHM crashed. It has spent nine months in recovery, building a base below the Exhaustion Gap down from 10.22, on August 10, 2007.

In Chart #2, we can see that VPHM put in a Bullish Falling Wedge (pattern in blue) within the larger Ascending Triangle (pattern in green) in March, and broke out of it on April 1, putting a target of 11.34 IN PLAY. After the breakout, VPHM had trouble getting above 10.00. The April highs were 9.94-9.97, so if earnings are very good this morning, I would expect them to open the stock there, or better. The top of the Ascending Triangle is at 10.10. The highs of the pattern were 10.30 and 10.19, so those need to get taken out to the upside as well.

I like the way that VPHM responded to the April 16 bad news about HCV-796. Something like that often is enough to crash a stock, but instead, VPHM went down and successfully retested the Bullish Falling Wedge breakout, rallied and failed at the 200DMA, then successfully retested the Bullish Falling Wedge breakout again. That's a bullish sign when stocks respond well to bad news. VPHM has moved higher off that DOUBLE successful retest of the wedge into the release of earnings, indicating that it wants to go higher. The release of earnings is always a wild card. If VPHM doesn't disappoint, and if it can break out of the Ascending Triangle, that would put something above $13 IN PLAY.

SPX

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Chart #1: I've had the SPX as a downward sloping channel (pattern in blue) not knowing, of course, what the recent action in the SPX would be here in late April. Given that pattern, the SPX put in THREE Bearish Hangmen/Bearish Doji Star Hangmen at the top of the pattern on April 2, 3 and 4, then had a false breakout on April 7 on a FOURTH Bearish Doji Star Hangman, then sold off to the 20/50DMAs, which made a Bullish Cross during the selloff.

April 15 was a nice upside reversal day (at Red #3), and the SPX went up and broke out of the channel on a closing basis. What lends some credence to this Channel pattern is the fact that the top of it was successfully retested THREE times, on April 22, 23 and 24, validating the breakout. That might get INVALIDATED later on, but as the chart stands, the top of the pattern is support, and the SPX has moved up and taken out the 1396 high of the Channel, on both a print and closing basis, on Friday, April 25.

Now the SPX has to get through the down trendline (black) coming off the October high (roughly 1406, which also was the November 26 low) AND take out the top of what looks to be a Bear Flag (pattern in red), which is at roughly 1402 for today, April 28.

So, nearby resistance here is 1402-1406.

Chart #2: Charts evolve, and patterns often "morph" or change into something else. Given the recent action in the SPX, it appears that the downward sloping channel in Chart #1 has "morphed" into either:

(1) a Bullish Inverse H&S (pattern in purple)
(2) a possible DOUBLE Bullish Inverse H&S (pattern in green), in which case it might sell off for a Right Shoulder (green question mark)
(3) an Ascending Triangle (rising dotted purple line).

Hold all paramutual betting tickets. The SPX has to break out into the 1400's and hold it to be bullish ;)

The NAZ 100 and QQQQ

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From April 18:

"Chart #2: The NAZ 100 already has broken out of a Bullish Falling Wedge with a nested Symmetrical Triangle (green), which put 1954.99 IN PLAY, very near a 50% Retracement of the decline from last autumn."

The Nasdaq 100 was at 1840.88 when we last looked at it. From there, it rallied 100+ points to a high of 1942.98 this week, 12 points shy and within less than 1% of the target IN PLAY. This rally is looking like a Bear Flag..."higher highs and higher lows" AT RESISTANCE at the 200 DMA, and at the confluence of the 50% Fibonnaci Retracement and the Bullish Falling Wedge target:

1962,16 - is the top of the "possible" Bear Flag for Monday, April 28
1957.59 - is the 200 DMA, as of the April 25 close.
1954.99 - is the Bullish Falling Wedge target IN PLAY
1953.90 - is the 50% Retracement of the decline from Halloween

Bear Flags/Rising Channels aren't always bearish, as we can see in Chart #2. There's no ALWAYS in the stock market, in my experience. LOL. Gigamedia (GIGM) broke out of two of two "Bear" Flags/"Bearish" Rising Channels to the UPSIDE last September and October, but notice that the 50/200DMAs were closely aligned. Those moving averages also gave a false Bearish Cross signal right before GIGM blasted off to the upside. It's better to watch the pattern breakouts/breakdowns rather than Bullish/Bearish crosses of moving averages, in my opinion. The latter can be very misleading.

The 50/200DMAs in the NAZ 100, however, are badly inverted here: the 50 is well below the 200 DMA, by almost 200 points. While this index still "could" accelerate alot higher here like GIGM did, that doesn't seem likely without some kind of pullback/consolidation first. If we get into the NDX 1950's, I'd be inclined to protect profits and "sell some into strength" and particularly inclined to "take some profits when the target gets MADE."

By the way, the corresponding target IN PLAY in the QQQQ is 48.16. The 200 DMA is nearby, at 48.1884, as of the April 25 close. Last week's high was 47.79, on Thursday.

XING - 7.79 - 7.89 Resistance

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From April 9 Comments:

"Chart #2 is getting ahead of ourselves, but if XING can rally somewhere near the last high of the Bearish Rising Wedge, at 7.79 on February 4, then pull back and consolidate, that could set up another nice base for a breakout and a further rally."

Chart #1 is a repost of the April 9 chart, and Chart #2 is an update of how that scenario has played out, thus far. XING rallied a little above 7.79, to 7.89, establishing the "possible" neckline for a 3+ month Bullish Inverse H&S and has sold off on QXM's earnings into a "possible" Right Shoulder.

Notice that in this Ichimoku Kinko Hyo chart ("At a glance...The Table of Balance), XING rallied above the Kumo, or "cloud" resistance (the vertical red lines) on the rally to 7.89, and that the stock currently is finding support at the top of the Kumo (cloud). Also, the 20DMA made a Bullish Cross of the 50DMA this week for the first time since QXM's earnings last November 14, and XING has managed to close above the 50DMA the past three sessions.

The chart is looking constructively bullish, similar to the "possible" Bullish Inverse H&S pattern that we had in January, that failed. That pattern was much smaller; only about a 6 week base. This pattern is a little more than 3 months' duration, so that's better. XING now needs to capitalize on the constructively bullish factors and go up and knock out that 7.79 - 7.89 neckline.

QXM and FXI: The Perfect Storm

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Interesting juxtaposition of the charts of QXM and FXI. Both were beautifully positioned this week for "The Perfect Storm," a marriage between good technicals and good news on the fundamentals.

QXM broke out of its 5-month Bullish Falling Wedge two days ahead of earnings and was ready to go on the upside, but disappointed. It gapped down at the open (usually a good sell) and landed at the bottom of the Wedge at the close. As bad as that 15% smackdown was, QXM has held at the neckline of the Bullish Inverse H&S for the past three sessions, the last two on two Bullish Doji Star Hammers for two successful retests of the neckline, so QXM hasn't given up the ghost entirely. The lows of the past two sessions both were 6.35, so that's nearby short-term support while QXM dusts itself off and considers, "Shall we try this again?!"

Yesterday's high in QXM was 6.61, so with those two Bullish Doji Star Hammers in place at the neckline, some traders might use 6.62, a penny above that high, as a "Buy Pivot," to enter the stock for at least a gap-filling rally, using something below the 6.35 lows, or whatever low is made prior to the print of 6.62, as their stop. QXM is thinly traded, though (only 117,200 share volume yesterday), so the trade wouldn't be very attractive to anyone who trades in size.

In contrast to QXM, FXI completed the Right Shoulder of the Bullish Inverse H&S pattern that we've been watching since April 11 and it was able to capitalize on "The Perfect Storm" between the good technicals and the good news out of China on corporate earnings and favorable tax treatment on stock transactions with a Breakaway Gap yesterday morning out of the Bullish Inverse H&S pattern, and with a big 6% gain on the day. As long as FXI holds above the neckline, 168.86 and 183.89 are IN PLAY.

FXI-related news (excerpted):

By John Spence, MarketWatch
Last update: 9:30 p.m. EDT April 23, 2008

BOSTON (MarketWatch) -- Exchange-traded funds tracking Chinese stocks rallied in U.S. trading Wednesday after the government, in a widely anticipated move, lowered the taxes on stock transactions.

An ETF tracking an index of the 25 largest and most liquid Chinese public companies, iShares FTSE/Xinhua China 25 (FXI:iShares:FTSE/Xinhua
News, chart, profile, more
 Last: 157.61+8.91+5.99%

China's Shanghai Composite Index was even more volatile and dropped as low as 3,089.89 before staging a sharp rebound as strong corporate earnings encouraged buyers to lap up resource and banking stocks. Hopes the government may announce measures to support the local stock markets, one of the worst performers in Asia so far in 2008, also aided the recovery

FXI: Bullish Inverse H&S Breakaway Gap

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From April 11:

"The overall pattern is looking like a Bullish Inverse H&S (if so, we're in the Right Shoulder here). If the FXI can break out above 151.54 (the April 7 high) and hold it, that would spring a Bear Trap on anyone who sold or sold short the March 6 breakdown."

FXI gapped away out of this Bullish Inverse H&S pattern. 183.89 is IN PLAY as long as the FXI trades above the neckline.

CHL: Gap Filled

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From April 18:

"86.51 just MADE. That's the third bullish target that has been MADE since the DOUBLE breakout in late March. Beautiful chart action."

CHL continues to act well. Yesterday's low 0f 83.68 was an exact gap fill of 83.67 and this morning, CHL is at new highs for the move, above 87.00. Raise the stop below 83.68.

CHL: Symmetrical Triangle

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"A Double Breakout like this one can be very powerful...86.51 still is IN PLAY."

86.51 just MADE. That's the third bullish target that has been MADE since the DOUBLE breakout in late March. Beautiful chart action.

NASDAQ And NAZ 100

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Chart #1: Since the beginning of 2008, the NASDAQ Composite has formed a possible Bullish DOUBLE Inverse H&S (purple one, nested within the blue one) with the neckline slightly above the 2386.69 August, 2007 low. For today, a print of 2385.59 would be a technical breakout above the neckline (blue), but we'd also want to see 2391 and 2413 (the highs on the neckline) get taken out as well. A breakout would put the 2530's IN PLAY. That's the declining 200DMA (dotted red line) and the November 26 low (Red #1), prior to the Symmetrical Triangle breakdown on January 4, 2008.

Chart #2: The NAZ 100 already has broken out of a Bullish Falling Wedge with a nested Symmetrical Triangle (green), which put 1954.99 IN PLAY, very near a 50% Retracement of the decline from last autumn. The 200DMA currently is at 1962, just above the target. On the breakout rally to 1885, the 20/50 DMA's made a Bullish Cross. On the pullback, the index filled the April Fools' Gap, put in a Bullish Hammer at the 50DMA, and has begun to move higher.

XING: Today's Open

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From Yesterday:

"If it can breakout above the 7.24...7.25...7.24 highs of this Rectangle, that would put a target of 7.71 IN PLAY, near the 7.79 February 4 high of the Bearish Rising Wedge, as long as XING would trade above the breakout."

7.71 MADE right after the open.

CHL: Symmetrical Triangle Breakout

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From April 4 comments:

"CHL broke out of the Bullish Inverse H&S (in purple) on March 27 putting 83.13 IN PLAY, and on the same day, it also broke out the large down trending channel (in blue). The channel breakout didn't hold on a closing basis on March 27, but it did in the next two sessions. A Double Breakout like this one can be very powerful."

The 83.13 target got MADE on April 7, the day that the Symmetical Triangle (in green) began to form. Given the Double Breakout in CHL at the end of March, that "should be" a bullish continuation pattern. We had confirmation of that from yesterday's breakout at 82.53 when the first target of 84.03 (the high of the pattern) got MADE. 86.51 still is IN PLAY.

XING: The Rectangle

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XING has been consolidating after the Ascending Triangle breakout above 5.88...5.89...5.89. If it can breakout above the 7.24...7.25...7.24 highs of this Rectangle, that would put a target of 7.71 IN PLAY, near the 7.79 February 4 high of the Bearish Rising Wedge, as long as XING would trade above the breakout.

CROX - Lowered Guidance

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From March 12:

"If this ISN'T a Bullish Wolfe Wave, stop a long trade out if Friday's 18.08 low gets taken down."

From March 22:

"18.08 got taken down in CROX, so I was stopped out for a loss."

It's never fun to take a loss, but when a stock isn't acting well, it's preferable to take a loss rather than allow the trade to turn into a disaster. CROX warned on earnings after yesterday's close and is indicated to open near $12.50, down about 30% from yesterday's 17.79 close. Yikes.

QXM - Symmetrical Triangle Breakout

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Broke out of the Symmetrical Triangle this morning.

XING: Weekend Thoughts

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From April 6 comments:

"In fact, it stampeded on Friday to the "bottom rung" of first Major Resistance, beginning at 7.15. That's the solid black horizontal line, where XING failed to put in a Bullish Inverse H&S bottom, as well as failed to put in a "Double Bottom" with the Autumn, 2007 lows of 7.65-7.87."

Chart #1 Daily: XING had a good week, closing up $0.18 in a down market, but we can see the challenge that the Bottom Rung of Major Ressistance presented (horizontal solid black line). Attempts to get above 7.15 were met with selling.

Chart #2 Hourly: XING spent the week trading either side of 7.15, initially forming a Symmetrical Triangle posted last week, which now looks to have morphed into a possible Bull Flag. It's only bullish if XING can take out the 7.24-7.20 highs. This chart looks VERY BULLISH. But, it must be viewed in the context of the daily chart. If XING can break out of the flag to the upside, it will be rallying into solid resistance, beginning at 7.15 on up.

Chart #3 Daily: If XING sells off this week into QXM's earnings, that might not be so bad. The stock is ahead of itself basis the moving averages. The 50 DMA is at 6.47. The 20 DMA is way-y down there, at 5.92, but accelerating higher. A selloff this week would give those moving averages a chance to make a Bullish Cross, similar to what we got last autumn, when XING broke out of a Double Bottom, crossing 9.98. Back then, XING rallied to 11.94 off the breakout, then went into a Bullish Falling Wedge continuation pattern (purple). Notice that right at the bottom of the wedge, the 20DMA made a Bullish Cross of the 50 DMA, after which XING exploded from 10.08 to 13.38 in only 4 days.

FXI: Update

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The FXI broke down below the Symmetrical Triangle (blue) on March 6, rallied to the downtrend line (dotted black) off the Halloween high and failed, then continued lower toward to the 116.54 target IN PLAY. The target didn't get MADE and FXI reversed higher, back above the breakdown, so that target goes ON HOLD. Notice that the FXI rallied almost exactly to old resistance on April 7, sold off, and is moving higher again. The overall pattern is looking like a Bullish Inverse H&S (if so, we're in the Right Shoulder here). If the FXI can break out above 151.54 (the April 7 high) and hold it, that would spring a Bear Trap on anyone who sold or sold short the March 6 breakdown.

XING: Symmetrical Triangle

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Chart #1: When looking at the very Short-term, the Hourly Chart can give us clues, as this chart did on the breakout above the 5.88-5.89 top of the Ascending Triangle (pattern in white). The 6.66 target was exceeded by a wide margin, and since rallying to 7.24 (the 7.15 area of the Bottom Rung Of Resistance), XING has been trading in a Symmetrical Triangle ([pattern in yellow), which "should be" a Bullish Continuation pattern, since the short-term trend is bullish. A parabolic rally beyond 7.24 most likely would have been met with selling, so it's technically better to see XING take a rest, as it has, and form this Symmetrical Triangle pattern, from which potentially, it can launch another (continuation) rally. If XING can break out of the Symmetrical Triangle pattern, a target of roughly 7.65 would be IN PLAY as long as XING holds the breakout, which would be about 7.19 for tomorrow, April 10 (these Scottrade charts aren't always accurate).

Chart #2 is getting ahead of ourselves, but if XING can rally somewhere near the last high of the Bearish Rising Wedge, at 7.79 on February 4, then pull back and consolidate, that could set up another nice base for a breakout and a further rally. EDIT: I'm unable to post this on the Yahoo XING Board. Error Message 999. If anyone can post my blog link to that board, I'd appreciate it. TIA.

BEN - Upgraded At Goldman

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Goldman upgraded BEN To Buy this morning, and raised the other asset managers and brokers from neutral to attractive. A print in BEN today of 105.45 would be a technical breakout of the top trendline. We'd also want to see the recent highs get taken out.

QXM: Back Inside The Wedge

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Chart #1: We last looked at QXM when it broke down at 6.60 below a 3-month wedge (pattern in purple) on March 4, which was confirmed on March 6 after a one day rally failure, back inside the wedge. Breaks like that usually indicate lower prices, and that was the case here. QXM fell an additional 16% to a post-IPO low of 5.50, on March 20.

Chart #2: Rather than go into freefall on the downside QXM, like XING, formed a small Bullish Inverse H&S pattern (black circles) that put a target of 7.19 IN PLAY. Militating against making the target was the fact that, immediately after breaking out of the pattern to the upside, QXM had to rally smack into the broken wedge resistance (pattern in purple). But, April 3 was a close back inside the pattern. April 4 was a rally, then a sizeable giveback of the gain (understandable, given all of that resistance). And, on April 7, although volume was a weak 164,000 shares, the 7.19 target got MADE. The high on the day was 7.29.

Chart #3: QXM is short-term bullish and now in The Neutral Zone, trading back inside the Purple Wedge. What would turn this chart bullish? Well-ll, an upside takeout of the purple wedge might be nice ;) The trendline at the top of the pattern is validated resistance, meaning that it was tested (almost exactly, on February 4, at 8.89), and failed. When a validated trendline gets taken out (up or down), that usually has some significance. Not always. But, the manner in which it is taken out can give of some clues. If, for example, some morning QXM should be called higher right at that trendline, say on good earnings, with volume coming in at the open, there's a ver-ry decent chance that QXM could "Gap And Go" like it did on October 9, 2007. That trendline comes in today, April 8, at 7.7139. The slope is 0.0269, so that amount is subtracted each day.

In the interim, on any selloff in QXM, we'd like to see the bottom of purple wedge hold as support, telling us that "last time it wasn't support, but this time it is!"

XING: Breakout Rally To Resistance

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From April 2 Entry:

(It's poised to go higher, but obviously is only bullish if it can break out to the upside, preferably on some volume. The target IN PLAY would be 6.66)

No problem for XING getting to 6.66. In fact, it stampeded on Friday to the "bottom rung" of first Major Resistance, beginning at 7.15. That's the solid black horizontal line, where XING failed to put in a Bullish Inverse H&S bottom, as well as failed to put in a "Double Bottom" with the Autumn, 2007 lows of 7.65-7.87. That area of 7.15-roughly 12.00 now constitutes six months' worth of resistance. XING rallied to 7.19 on Friday on its first bid to regain that area, then pulled back into the close of 6.74.

CHL: At The Bottom Of The Gap

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CHL broke out of the Bullish Inverse H&S (in purple) on March 27 putting 83.13 IN PLAY, and on the same day, it also broke out the large down trending channel (in blue). The channel breakout didn't hold on a closing basis on March 27, but it did in the next two sessions. A Double Breakout like this one can be very powerful. Minimum expectation for the channel breakout: the bottom of the gap, at 82.69. CHL just printed 82.69 in only six trading sessions from the Bullish H&S breakout, at 74.00.

XING - Daily Chart

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In the daily chart, XING has formed an Ascending Triangle over the past three weeks. Flat top with a higher low. It's poised to go higher, but obviously is only bullish if it can break out to the upside, preferably on some volume. The target IN PLAY would be 6.66, but targets against the dominant trend, which has been bearish, are less likely to get MADE. This pattern is "skimpy" in terms of width, but in September-October, 2007, XING broke out of only a 4-week Double Bottom (7.78-7.65). That was good enough for a powerful Bear Market rally to 13.37.

XING - 5.88-5.89 Resistance

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From March 11th:

"Possible Support #2: 4.95-5.06 - the mid-to-late 2005 lows were 5.00...5.00...5.02...5.06. In the daily chart, the failed Inverse H&S target that is IN PLAY is 4.95, "suggesting" a test of that 5.00-5.06 horizontal support area."

XING put in a low of 5.10 on March 20, four cents above the top of the Support #2 area. There now are three highs in the hourly chart at 5.88...5.89...589. It isn't a strong pattern (only of three weeks' duration), but if XING can take out those highs, 6.66 would be IN PLAY, as long as XING trades above 5.89. More importantly, a successful upside breakout here would be the first bullish move in XING in nearly six months.