(Click on charts to enlarge, then click on them again for further enlargement. Use left arrow on your browser to return to the narrative).
The SPX Bulls didn't give it up in yesterday's session and managed to put in another Doji Star on the week. We don't know if it's a "Bullish" Doji-Star at this point. Monday's Doji Star did have "some" upside follow-thru, but the rally failed right at Trendline #2-#4 resistance, then the low of that Doji Star got taken down on Wednesday, so that produced only a "One Day Wonder," rather than a Doji Star marking a bottom.
Speaking of Doji Stars...
...we also got one yesterday in FCX. Again, we don't know if it's a "Bullish" Doji Star unless/until we get some meaningful upside follow-thru, like we had with the three Doji Stars in the chart during the past two months:
(1) The April 18 Doji Star (Blue #2), two days prior to the release of earnings, produced a 6-point rally into the thick of overhead supply from early 2011.
(2) The May 5 Doji Star (Blue #4) produced a three day rally of 2 1/2 points that failed at the bottom of Kumo (Cloud) resistance.
(3) The May 17 Doji Star produced a rally to resistance at Trendline #2-#4 ...a selloff ... then a Bullish Island Reversal candle and an upside breakout of an Ascending Triangle. The total rally from the May 17 close was about 6 points and it also ended at Kumo (Cloud) Resistance.
The low of yesterday's Doji Star was a trendline validation of Black Trendline #1-#3 of a possible Bull Flag. That's a plus for The Bulls, to have established a pattern from which to launch a rally.
If the Bulls can break out of the "possible" Bull Flag, and more importantly, take out Blue Trendline #1-#3, which comes in today at 50.405, that would be a DOUBLE breakout of The Bull Flag and The Falling Wedge. Never any guarantees, but that setup is the kind of thing that can be very helpful, since we still have Kumo (Cloud) resistance immediately overhead, which has shut down the last two Doji Star rallies.
Since the April 11 breakdown of the Rising Wedge, at 44.44, SLW has had five pattern breakdowns (red arrows) and has been a short seller's dream. Yesterday's low of 29.79 got to within fifty cents of the channel (pattern in black) target of 29.28 that has been IN PLAY since May 2. That target might still get MADE and SLW might go lower than that, but given the nature of the waterfall decline off the May 31 high of 37.20, The Bears might want to think about not staying too long at the fair.
After closing below the 43.86 low of the Triple Top in US Steel (X) on June 3, The Bulls made three attempts to get back above it and failed at 43.84, 43.85 and 43.80 (the three red arrows). Off that TRIPLE resistance, the Triple Top target of 41.43 got MADE in yesterday's session, after which I played it long for a snapback rally trade. That $500 gain turned out to be my best trade of the session. I ended up trading AMZN, without much success :(
One of the most difficult things to learn in the stock market is to take losses on SERIOUS breaks of support, like the gap down to $57 on RIMM's earnings in March, or on the gap down to 48.50 in April, when the company lowered guidance.
There are two old market saws, "Don't let a loss turn into a disaster," and "Don't try to catch falling knives." RIMM has been both a falling knife and a very avoidable disaster. "Know when to hold 'em...know when to fold 'em."
RIMM traded down $5 in after hours, near $30. That "could be" capitulation, but that was said about the April 29 gap down to $48.50, when the analysts abandoned the stock en masse. UGH.
The broken flag target in AMZN of "roughly" 182 got MADE in yesterday's session, without me being short. Gr-r-r...
I shorted AMZN at the top of this Rising Wedge and the trade looked golden when the Wedge broke down, but I got one of those "knuckle-biters" in which AMZN traded back above the broken trendline. UGH. I tend to throw those in, not wanting to get caught in a short squeeze if it was a Fakeout Breakdown, so I covered for a $50 gain. At that point, I had been working for 8 hours and needed a break. You can imagine what I said when I came back to my screen and saw what AMZN had done on the downside.
Arrrrrrrrrrrrrrrrrrrrgh!
After I quit screaming, I saw that AMZN had bounced off support, near 181.64, so I put in a buy order for 1,000 shares at 181.75. "They" only gave me 190 shares. Geez, I get tired of that nonsense. I sold the 190 shares when AMZN rallied about a dollar, for a $150 gain. Sheesh.
This chart is the reason why my downside target for AMZN was "roughly" 182.00 on the Flag breakdown in the daily chart above, and is the reason why I wanted to get long at 181.75. It all depended on where Blue Trendline #2-#4 of the Falling Wedge came in, if/when AMZN sold off.
AMZN broke out of a Bullish Inverse H&S pattern on April 27 on a HUGE white candle, after two Bullish Island reversals below the neckline. While the general market has been selling off recently and breaking support levels, AMZN has been pulling back to neckline support, and to support at the bottom of the Kumo (Cloud). It remains to been seen if it will be successful or not, but AMZN is showing excellent relative strength here, thus far.
Gain on the session: $700. UGH.
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