I'm watching "Fast Money" on CNBC. They're discussing how difficult this market is to play. Amen! I got long IBM on both Thursday and Friday, threw both of those trades in for a small gain when the upside breakouts came back in my face, only to see it rip to the upside yesterday. Sheesh...
"The market will disappoint the greatest number of people possible." IBM shorts certainly are disappointed. I was bullish TWICE on the "false start" breakouts above $93, and I got disappointed, too.
Yesterday's Rectangle breakout put 103.32 IN PLAY. 106.45 still is IN PLAY from the December Bullish Inverse H&S breakout. I "might" consider buying IBM on a pullback, but my feelings are hurt that I got snookered, so I'm not sure about that. LOL.
At yesterday's open, the top of the Symmetrical Triangle came in at 102.83. APPL gapped up to 102.71, printed a high of 103.30, then sold off and filled most of the opening gap.
A "Gap And Go" wouldn't have come back to the gap. It would have gapped up, had a minor pullback at most, then ripped to the upside.
A "Gap To Crap" would have opened like it did, come back in an apparent gap fill, but would have continued down, gone in the red, and would have kept going farther into the red.
Yesterday's action was a "Gap And Fill," for lack of a better term. The "TELL," that it very likely was bullish was when APPL rallied again and took out the morning high of 103.60, known as a "Buy Pivot." A print of 103.61 is a technical buy for anyone using that pivot. The Symmetrical Triangle breakout put a target of 106.06 IN PLAY.
103.48 High of the pattern minus the 100.25 low of the pattern = 3.23 points of upside on a breakout above the top of the pattern at 102.83 = Target: 106.06 IN PLAY.
When the 103.61 Buy Pivot got printed, the "logical stop" on the trade was the morning low of 101.75, or about two points of downside. The 106.06 upside target was a little over two points of reward if it got MADE, which it did. The risk:reward wasn't so hot, and after my TWO fakeout/breakout trades in IBM on Thursday and Friday, I decided to pass on the 103.61 Buy Pivot.
Ms. Market KNEW that I passed, so she rallied AAPL above 108, and closed it at 107.66. LOL.
Daily chart is looking real decent. AAPL has "turned the corner" higher, above the 103 Triple Top, and sits at a multi-month high.
From my weekend comments on FAZ:
"...take profits when targets get MADE" at this 34.50-34.80 Rectangle resistance area. We know that targets against the trend are less likely to get MADE. The trend has been down, and we're AT RESISTANCE, so if I had gotten long the Ascending Triangle breakout, I would take at least some off the table."
Oh, my. What an UGLY day for the FAZ. The "possible" Bearish Wolfe Wave simply turned out simply to be a Bear Flag AT RESISTANCE. Yesterday was a big Gap Down, and down she went for a 45% loss in a single session.
Oh, my.
Last Thursday, the SPX gapped up out of this channel, reversed, and also sold off on Friday. Bears were shorting there, and Bulls were looking for more of a pullback, to get long. Again, "The market disappoints the greatest number of people possible." Bears were forced to "Buy To Cover," Bulls were forced to buy the breakout at higher prices (like IBM and AAPL) if they wanted in.
A breakout of a downsloping channel like this one isn't he most bullish thing in the world because there's lots of lateral, or horizontal, resistance on the way up. This type of breakout usually results in some backing and filling.
Kumo (Cloud) resistance (the vertical lines) also is directly overhead, and coming down hard, which also suggests some backing a filling.
Marty Zweig (whatever happened to him?) had an indicator that had to do with 90% Advancing Volume up days within a certain period of time being bullish. Someone on CNBC yesterday pointed out that during this rally off the lows, there have been FIVE days in which 90% of the volume went to Advancing stocks. Check me on that for accuracy, if interested.
On a pullback, ideally, the top of the channel "should be" support since it was "former resistance." It comes in today, March 24, at 785.219 and falls at the rate of 2.993 points per session, so for the remainder of the month, the top of the channel will come in as follows:
March 24 - 785.219
March 25 - 782.226
March 26 - 779.233
March 27 - 776.240
March 30 - 773.247
March 31 - 770.254
3 comments:
There was a post at Quantifiable Edges about 2 90% up days, he'd run some backtesting and found it to be bullish, it's http://quanntifiableedges.blogspot.com/ .
I get a target of around 750, too, just using a simple ~50% retracement.
nice work melf.
faz dropped after 34.8
overall tide has turned and good news or lack thereoff pushes market up. i missed Friday pull back. perhaps get in on coming Friday.
linus
Susannah,
Thanks. It would seem that FIVE 90% up days off the March 6 low would indicate that we've seen a bottom, at least for awhile. We'll see.
I'd like to see a sideways-to-down move in the SPX to consolidate the big recent gains, and to retest the top of the channel, similar to what IBM did in December after it broke out of its Inverse H&S Bottom (see the daily chart that I posted).
After the breakout, IBM went down over a two week period, validated the neckline breakout, then took off higher.
Linus,
Yes, the 34.50-34.80 resistance at the bottom of The Rectangle in the FAZ turned out to be serious resistance, and Monday's gap down to 26.94 was one of those "Show No Mercy" gaps.
Longs couldn't get out without a big loss; shorts couldn't get the entry that they wanted at the break of the Bear Flag, near 33.
Monday's gap down was very similar to the March 10 Gap Down to 85.60 out the H&S Top. No chance to sell or to sell short at a decent price, back near the neckline break in the 93's.
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