SSO: Three Bullish Patterns

I mentioned yesterday that, while the NASDAQ sold off and the H&S Top target of 1600 got MADE, the SPX didn't give up much. If you look to the left of the chart, the SSO (and SPX) sure looked like a H&S Top, as well, but it didn't get going on the downside.

"Don't short a dull market" came to mind, as well as the dog that didn't bark in The Hound Of The Baskervilles. Why isn't that danged dog barking?? ala Why isn't the SPX selling off??

ANSWER: Because it didn't intend to sell off. The SSO (and SPX) broke out of a Symmetrical Triangle (pattern in white), then formed a Bull Flag (pattern in yellow), the bottom of which found support at the top of the Symmetrical Triangle, at 22.36. "Former resistance became support, as it should."

Oh. Oh-h-h-h.... Duh-h-h...LOL.

I got long the SSO at 22.48, coming off the bottom of the Bear Flag. As we know, Bull Flags and Bullish Falling Wedges are notorious for "morphing" (changing) into Bullish Inverse H&S patterns, so I sold at the "possible" neckline, at 22.77 (I mistakenly wrote 21.77 on the chart...it's 22.77) and placed an order to re-enter at 22.65, figuring that the "possible" Right Shoulder would come down at least that much. The market was stretched on the upside, so I was looking for some cushion.

The SSO sold off TWICE, to 22.67, two pennies above my buy order at 22.65, and I never got filled :(

Curses! That was a bit stubborn on my part, not to change it to a market order. What can I tell you? LOL.

When it became clear to me that I wasn't going to get filled, and that the market very likely was going higher, I got long JOYG again (see Tuesday morning's post, if interested) and also got long IBM (see those past posts, as well), knowing that both stocks have had multiple bullish breakouts.

JOYG moved higher. When the general market broke out, IBM went down from my entry. Sheesh. When IBM rallied back above my entry, I sold both stocks quite simply because I was falling asleep. Literally. And, with the SPX back in the mid-860's, I was thinking "possible Double Top."

I no sooner sold, than IBM started to rally, and JOYG continued higher. Curses! As focused as I was on the Symmetrical Triangle and Bull Flag in the first chart, here's what I missed...


The pattern in red is an Ascending Triangle. The highs are identical, at 22.96. The low is 22.36. 22.96-22.36 = 0.60 points of upside on a breakout. 22.96 + 0.60 = Target: 23.56 IN PLAY. The high on the session was 23.60, and the target got MADE.

Lesson: Try to stay awake next time, Melf. Yawn. Z-z-z-z-z................

Gain on the day: a tad over $2,000.

NASDAQ And QID

From yesterday:

"On the downside, the broken H&S Top in the 10-Minute chart put roughly NASDAQ 1600 IN PLAY (1660-1630 = 30 points of downside from the break below 1630)."

NASDAQ 1600 got MADE late in the session.

The NASDAQ gapped down on INTC's earnings, but bottomed very quickly around 1607. In the 1-Minute chart, the QID was looking like a Bear Flag, so I sold my positions at 42.65 and looked to enter a third time on a move to fill the opening gap.

The Bear Flag broke down, which put roughly QID 42.05 IN PLAY. I bought back my postions again at 42.08. The NASDAQ fell to 1602, then rallied again. The SPX was holding up very well, refusing to break much below the low 840's, so I sold again at 42.68 and was very glad that I did when I saw the rally into the close.


Gain on the two re-entries: $6,100. Total gain on the QID play: $10,400.

NASDAQ And QID

The rally off the March 9 low sure has the look of a Bearish Wolfe Wave that possibly ended in a Bearish Rising Wedge at Wave 5. I would have liked it better if the NASDAQ had a Fakeout Breakout at Wave 5, but the April 13 high of 1660.83 fell shy of the trendline by roughly five points.

As we know, Bearish Rising Wedges are notorious for "morphing" (changing) into H&S Tops, which is what I was watching for when the NASDAQ gapped down yesterday morning and found a short-term bottom at 1631 to form a possible neckline with Tuesday's 1630 low. When the NASDAQ rallied to fill the morning gap and to form a possible Right Shoulder, I shorted it by going long the QID in both accounts in the 40.90s, just above the gap. That worked out nicely. The low on the session was 40.83 then the NASDAQ sold off and broke the 1630-1631 neckline of the H&S Top.

After rallying above 42.00, the QID looked to be putting in a very short-term H&S Top with the neckline at 42.00. I sold both positions just above the 42.00 neckline. The break of the neckline put a downside target of 41.69 IN PLAY, so I re-entered both postions in the low 41.70's.



Gain: $4,300. I'm long the QID from 41.70 and 41.72. We can see in Chart #2 above that the NASDAQ already has had a failed retest of the 1630-1631 broken neckline of the H&S Top. The afternoon high got above it, to 1635.33, then failed. If the NASDAQ rallies back above that high, I'll throw it in and keep roughly half of my gains from yesterday's trades.

On the downside, the broken H&S Top in the 10-Minute chart put roughly NASDAQ 1600 IN PLAY (1660-1630 = 30 points of downside from the break below 1630). That's just above the 1590-1596 gap in the chart from April 8, so given the broken H&S Top, a move down toward that gap seems reasonable. Especially so, since I'm long the QID ;)

JOYG: Symmetrical Triangle Pullback

JOYG broke out of a little Symmetrical Triangle in last Thursday's trading, crossing 24.41. The high of that candle was 25.38; the low was 23.16. When I saw JOYG sell off yesterday morning with the general market, and go below the 24.41 breakout, I entered orders at 24.27 and 24.01, the 50% and 61.8% retracements of Thursday's breakout candle, respectively.


Both orders got filled. The low of the day was 23.95, six cents below the 61.8% retracement. When JOYG bounced off that, I sold the position entered at 24.27 when it rallied back above that, and held the position entered at 24.01 for a rally back toward the opening gap of 24.80.

The remainder of the sell order. I couldn't capture it in one screenshot.

Gain on the two trades: $2,300. I was hoping to get back in on this second position on a retest of the morning low, but no luck. JOYG held up and closed in the green.

Basis the Ichimoku Kinko Hyo Chart, "At a glance...the Table of Balance," we can see that JOYG has turned the corner and is moving higher, above Kumo (Cloud) support. Notice that if the 28.88 Symmetrical Triangle gets MADE (sorry, I made a mistake and put 28.81 on the charts), that would be just above Data Point #3 on the BIG Symmetrical Triangle, and also that Barclay's $28 target would get MADE.

SLV: Possible Symmetrical Triangle

From my weekend comment to Katzo, regarding the SLV:

"In the current time-frame, the SLV looks better to me than the GLD, but I've got "likes" and "dislikes" about it."

Since we've been looking at GDX, GLD and GG, I thought that it might be worthwhile to take a look at the SLV.


Basis the weekly Ichimoku Kinko Hyo chart, we can "see at a glance...the table of balance" that in the Summer, 2008 when the SLV broke below the Kumo (Cloud), represented by the vertical lines, the SLV tanked to a low of 8.45 in October, 2008.

Off that low, the SLV formed a Symmetrical Triangle and broke out of that, then formed an Ascending Triangle and broke out of that. The 12.63 and 12.94 targets both got MADE, and more. The SLV topped out at 14.45 in late February, 2009.

We also can "see at a glance...the table of balance" how the Kumo (Cloud) acts as resistance when it is overhead. Generally, I find that the first attempt to get through it isn't successful, particulary when it's thick, like it is in this chart.

What I like about this chart is:

1. That the SLV possibly is trying to form another Symmetrical Triangle and break out of it, for a bullish continuation pattern.

2. Last week's possible Bullish Doji Star Hammer, which would be Data #4 for the Symmetrical Triangle if last week's low of 11.94 holds up, and if the SLV breaks out above this pattern.

3. The fact that the SLV has been consolidating its gains off the October low while trying to get through Kumo (Cloud) resistance. Structurally, that looks nice.

Basis the daily Ichimoku Kinko Hyo chart, we can "see at a glance...the table of balance" that the April 6 gap down in the SLV also was a gap down below the Kumo (Cloud), which now represents overhead resistance. That isn't fatal, but it's more difficult for the SLV to move higher than it was when it broke out of the Ascending Triangle (pattern in purple) in January. That breakout also was well above Kumo (Cloud) resistance, and it was clear sailing to 14.45.

The MACD histogram ticked higher on Wednesday, and has put in a positive divergence. I like that, but a positive divergence without price confirming it by moving higher is meaningless. It's a plus, though. We now would want to see the MACD itself tick higher, and then go up through its signal line.

The 55 and 89 RSIs both went into bullish synchronicity with their respective "shadows" (the 89 and 144 RSIs), and have bounced higher. I like that. I don't like the fact that the readings are "lower lows" (horizontal lines), but the SLV still could move higher. The "buy pivot" signal was given at 12.21 when the SLV took out the 12.20 high of the pivot day.

That's just a buy signal from this particular indicator. It's up to us to look at "the body of evidence," and decide if we want to take the signal.

The pivot candle from the 55 and 89RSI "buy pivot" is circle in green. The 11.94 low of that candle "shouldn't" get taken out. That 11.94 low also is the putative Data Point #4 for the possible Symmetrical Triangle bullish continuation pattern, so if it does get taken out, that pattern is invalidated.

I like the fact that the 50/200Day Moving Averages made a Bullish Cross on March 27. The 50 is the dotted green line; the 200 is the dotted red line.

The GLD chart puts me off, but I'm considering buying the SLV with a stop below 11.94for a low risk:reward play (always excluding a gap down in ensuing sessions). In January, 2009 the GLD had a false breakdown out of a rising channel (see last week's charts), but the SLV was looking very decent and both ended up having a nice rally. That might be the case again here.

GLD - H&S Top Target

In yesterday's comment section, ghamal asked, "Would the target for the H&S break on GLD be 70?!"

To calculate a H&S Top target, find the distance between the high of The Head (98.99) and where the neckline was (86.33) on the day when the high of The Head was put in. 98.99 - 86.33 = 12.66 points of downside. Subtract that from where the neckline was (87.19) on the day that the pattern was broken.

On April 6, the GLD gapped down below the neckline, so 87.19 - 12.66 points = Target: 74.53 IN PLAY. Notice that if the target should get MADE, that would be a gap fill of the December 5 close of 74.52. December 5 was a very significant day. The candle that day violated the top of the Symmetrical Triangle intraday, but stuck the close at the top of the pattern on a Bullish Doji Star Hammer. The next session was a gap up Bullish Island Reversal, leaving the December 5 candle as an "island," detached from the prior session, and also detached from the session that followed. The GLD exploded higher to the Symmetrical Triangle target of 85.39, and a bit higher than that.

ghamal also asked, "And when would you know if the H&S scenario is wrong?"

That's a very good question, and it isn't always easy to determine. Let's look at the patterns on this chart, and I'll show you what I mean.

The first pattern in September-October, 2008 is a Descending Triangle. On October 16, it broke down convincingly, putting a target of 69.77 IN PLAY. The very next session, however, the GLD ran up for a retest of the bottom of the pattern, which is a bit of a knuckle-biter for anyone who is short. What will we do if the GLD trades back above the pattern, intraday? What will we do if the GLD closes back inside the Descending Triangle?

In this particular case it never was a problem, answering those questions. The GLD never made it back to the bottom of the pattern. It went back down and closed on a Long-legged Doji candle and the target ended up getting MADE three sessions later.

The next pattern, October-December, 2008, is a Symmetrical Triangle. On November 21, while the rest of the market was putting in new lows, the GLD exploded out of this pattern. It put in a high the next session, then came all-ll the way back to the top of the pattern, and on December 5, went well below the pattern, intraday, and filled the November 20 gap. That intraday violation was a horrible Bear Trap because, as we discussed above, the close was back above the Symmetrical Triangle, and the next session was a Bullish Island Reversal. Bears who shorted the intraday violation were trapped. Would we have sold the intraday violation? That's up the individual, but you see why I say that it isn't always easy to make those decsions. We couldn't know during that session that the intraday breakdown was a HUGE trap!

The third pattern (in purple) is a Bear Flag. It broke down, but found support above the Kumo (Cloud). I almost shorted that pattern and posted on it, but fortunately, I looked at the SLV chart which looked very bullish, and got long the SLV. On January 16, the GLD closed back above the bottom of the Bear Flag, but just TWO cents! Ugh. That's a tough, tough decision, whether or not to remain short (if one is short) in a situation like that. Some players will wait for two closes back above the pattern. Personally, I get outta there on a close like that (I was long the SLV at that time, so it didn't matter). The next session, the GLD gapped higher and closed well inside the Bear Flag. Anyone staying short at that point is stuck "hoping" that they'll get saved, and that the GLD will go back down. They were in serious trouble when the GLD gapped higher again, three days later.

Finally, this "possible" H&S Top. I don't have a position, but if I did, I would cover a short on any CLOSE back above the putative neckline, which comes in today, April 9, at 87.273. The slope of the neckline rises 0.02767 per day, so add that amount each session. There's no trading on Friday, so Monday, the neckline will be at 87.30.

A close back inside a broken pattern always puts the target ON HOLD, meaning that maybe the pattern breakout or breakdown was a fakeout, or maybe the move back inside the pattern is the fakeout. That's why I usually throw it in if I get a CLOSE back inside a pattern. It always can be re-shorted (or re-entered long) if it breaks out or breaks down again.

Yesterday, the neckline was at 87.23. The GLD opened just below it at 87.18, rallied back inside the pattern to 87.53, then reversed and closed down on a black candle. That's the second session in a row that the GLD tried to regain the pattern, but failed, so the breakdown still is valid.

Again, if the GLD closes back inside the pattern, the breakdown would be highly suspect and I would cover if I were short (I have no position)

Sorry that this is so lengthy, but I wanted to give some "real life" examples of these decisions that we have to make. They aren't always easy.

GLD - H&S Top? - Bullish Falling Wedge?

Classically, this possible H&S Top has three things wrong with it, technically:

1. The Right Shoulder is wider than the Left Shoulder. It should be narrower.

2. The high of the Right Shoulder is higher than the high of the Left Shoulder. It should be lower.

3. The volume during the pattern was highest on the move into the Right Shoulder. The volume in the Right Shoulder should be the lowest in the Right Shoulder.

That said, my feeling is that "if it walks like a duck ... quacks like a duck ... chances are, it's a duck!" LOL.

For example ...

This H&S Top in Yamana Gold (AUY) in 2008 was "a duck," even though it was all wrong, classically.

1. The Right Shoulder was wider than the Left Shoulder. It should have been narrower.

2. The high of the Right Shoulder was higher than the high of the Left Shoulder. It should have been lower.

3. Volume during the formation was highest in The Head. It should have been highest in the formation of the Left Shoulder.

Despite those imperfections, the neckline broke in the mid-14s, and the H&S Top target of 4.73, which "seemed" a bit ridiculous at the time, got MADE.

Regarding the GLD in the current time-frame, H&S Top or not, it's at least broken the horizontal trendline (neckline?), and has fallen below the Kumo (Cloud) support in the Ichimoku Kinko Hyo chart, the bottom of which comes in at 88.93. The Kumo (Cloud) is represented by the vertical lines, and it now is overhead resistance.

I would need to see the GLD get back above the broken trendline and CLOSE back above the bottom of the Kumo (Cloud), currently at 88.93, in order to rate it a "neutral." If the GLD can do better than that...


... we could have a Bullish Falling Wedge, rather than the H&S Top, if the GLD can take out the top of the pattern, currently in the mid-91's.

The broken H&S Top in the 34 thru 144 RSIs, though, is suggesting that the GLD will have a tough job of it, getting through resistance from here to the mid-91s - mid-92s.

The RSIs are improperly positioned (bearish) with the 34 below the 55 ... the 55 below the 89, etc. On any rally in the GLD, the RSIs will rally into Bearish Synchronicity at/near the broken neckline of the H&S Top. They will need to "Go Go Go" to get back above the neckline, and get bullishly positioned again. Possible, of course, but that's going to require some muscle.

GG: H&S Top - Symmetrical Triangle

The H&S Top target of 29.66 got MADE in the early going yesterday.

Math for the target:

35.47 - High of The Head
32.53 - Where the neckline was when the high of The Head got put in

35.47 - 32.53 = 2.94 points of downside on a neckline break, which occurred below 32.60.

32.60 - 2.94 = Target: 29.66 IN PLAY

When targets get MADE, that only tells us that that particular move is finished. The stock can change direction at/near the target, or simply continue in the same direction. Our job is to try to follow, and see what eventuates.

Notice the little candle of St. Paddy's Day that is (appropriately) circled in green. That was a "pivot candle" during the Double Bottom formation. A number of the RSIs had come into Bullish Synchronicity, and the MACD was ready to go through its signal line, after putting in a positive divergence in its histogram. When the 29.19 high of that "pivot candle" got taken out in the next session, GG moved higher and also took out the 30.85 pivot of the Double Bottom, or "W"-Bottom (synonymous), putting a target of 35.53 IN PLAY.

Math for the Double Bottom target:

30.85 - The high at the middle of the "W."

26.17 - The more conservative of the 26.17 and 26.15 bottoms.

30.85 - 26.17 = 4.68 points of upside on a breakout above 30.85.

30.85 + 4.68 = Target: 35.53 IN PLAY.

That target got MADE, within six cents. The high of the March 26 Doji Star Hangman at the Morph line was 35.47.

In yesterday's selloff, after the H&S Top target of 29.66 got MADE, GG went down to 29.20 in the first five minutes of trading, a penny above the St. Paddy's Day pivot high, and bounced to 29.79. At 10:05AM, GG sold off again, and bounced off 29.17, two pennies below the St. Paddy's Day pivot high.

Hmm-mm...that was looking like support there.

As trading progressed, we can see in the 5-Minute chart that a Symmetrical Triangle formed after the 29.20 and 29.17 lows of the early morning got put in. After Data #4 was established, I got long GG at 29.64, just prior to the Symmetrical Triangle breakout. Stop: 29.43, below the low of Data Point #4.

The Symmetrical Triangle broke out above 29.65, putting a target of 30.27 IN PLAY.

Math for the Symmetrical Triangle:

29.79 - High
29.17 - Low

29.79 - 29.17 = 0.62 points of upside on a breakout above 29.65.

29.65 + 0.62 = Target: 30.27 IN PLAY.

GG rallied to a high of 30.28 at 12:10PM, which remained the high until late in the session, and the target got MADE. Since it was a breakout against the trend, I sold a little early, at 30.17.


Gain: $1,300.

Combined with last week's gain of $4,300, that puts me at a gain of $5,600 in GG which is nice, but in retrospect, given the number of "Tells" that we got at the top, I "shoulda" held some shares short and not covered all of it at the 31.76 gap fill on Friday, playing it for a re-entry short on a retest of the 32.31-32.32 bottom of the little Rectangle/Double Bottom in the five minute chart, which never occurred.

"Coulda ...shoulda ...woulda." Don't we ALL have those? LOL.

Go back and look at the first chart. Here were "The Tells:"

1. Failure at the Ascending Triangle Morph Line.

2. Failure at the Morph Line, on a Doji Star Hangman.

3. Bear Flag formation.

4. Bear Flag morph into a H&S Top (Bear Flags and Bearish Rising Wedges are notorious for doing that).

5. Right Shoulder failure at 34.83, just below the 34.93 Gap from the Doji Star Hangman close.

6. Rectangle/Double Bottom (32.31-32.31 lows) in the 5-Minute chart that got taken down on Friday, along with the 32.50-32.57 neckline of the H&S Top.

Ms. Market gave us A LOT of "Tells" about that top.

GG: H&S Top - AZO: Channel Retest

They opened GG yesterday at 32.55, below the 32.50-32.57 neckline of the H&S Top, but above the 32.31-32.32 bottom of the Rectangle/Double Bottom in the 5-Minute chart.

As we discussed, a H&S Top in an Hourly Chart "should" trump a Double Bottom in a 5-Minute chart, so I shorted GG with a stop above 33.15, the highs of The Rectangle/Double Bottom in the 5-Minute Chart.

As soon as I got short, they popped it to 33.02, but only briefly. GG came back down to the 32.50's very quickly, so I also shorted it in my TDAmeritrade account.

Trading plan: Stop above 33.15. Buy To Cover near the 31.76 gap. Re-enter short on any rally back to the 32.31-32.32 bottom of the Rectangle/Double Bottom.

I covered both postions at 31.79, but didn't get the chance to re-enter short. That's fine. I was grateful for any gain on this devilish H&S Top ;)



Gain: $2,950. Combined with the $1,200 and $150 gains on GG earlier in the week, that's a $4,300 gain in GG on the week so "working hard for the money" paid off, and they sure did made me work hard, trying to follow along and figger out this H&S Top with the HUI going to a new high in the process! LOL.

From yesterday morning, on AZO:

"The upward slope of the channel is 0.6909, so the bottom of the broken channel will come in today, April 3, at 161.628. The low of Wednesday's strong candle, when AZO fended off the "Kiss of Death" MACD signal, was 161.502, so if AZO should rally today, it should meet with some resistance there, at 161.502-161.628, on up."

As I've often said, we can't expect exactitude from technical analysis, but in a $160 stock, in particular, it was pretty amazing to see AZO print a high on the day of 161.62, nailing the bottom of the broken channel to the exact penny!

My plan was to short AZO at 161.48, just below the bottom of the resistance zone, and also at 162.95, just below the 163.08 midpoint of Thurday's black candle. AZO was down on the session, but was coming back so I went ahead with my plan and entered the short trade at 162.95, and was then going to enter the short trade at 161.48.



No shares available to short at Scottrade, and no shares available to short at TDAmeritrade either. About an hour later, AZO rallied to the 161.62 high of day, and sold off. Curses! Geez, that's frustrating when you've done the work, and then "ain't allowed to play." LOL.

I don't play options except on RARE occasions, but when my order was rejected, I looked at the May 160 Puts (Symbol: .AZQOL) when AZO was trading at $159.50. The Bid was $9.40; the Ask was $9.70.

No, thank you :(

GG And AZO

From yesterday morning, on GG:

"GG still is looking like a H&S Top...The Left Shoulder should be wider than the Right Shoulder and so far, that's alright, but GG would need to break the neckline fairly soon."

Would the first hour of trading yesterday be soon enough? Wednesday's close in the HUI, above the channel and at a new high for the move, was a dirty deal! LOL. Sheesh...

GG gapped down to 33.93, printed a high of 34.05, then tanked and broke the neckline of the H&S Top in the first hour of trading! And, yes, I watched it, saying, "Please tell me that you aren't serious, Ms. Market!" LOL.

Although the neckline CLEARLY got broken on the print of 32.31, I wasn't about to short it with GG already down 7% on the session. Horizontal resistance (the horizontal red line) was 33.22, so I entered an order to short GG just under that, at 33.21.

No dice. They printed highs of 33.15, and wouldn't let me have it that close to resistance. I can't really blame them. Meanwhile, I had my AZO long trade coming back in my face after being up almost $1,400 from my morning entry, so I threw that in for about $160 gain. We'll get to AZO in a minute, but what a frustrating morning! LOL.

If they had let me have GG short for 33.21, I would have thrown that in at the close, as well, because of this 5-Minute Chart. The entire session, after the early break of the neckline in the Hourly Chart, is a Rectangle that is set up for a possible Double Bottom, or "W-Bottom" (they're synonymous) breakout. The highs are 33.15. The lows are 32.31 and 32.32. I didn't like seeing GG finding late afternoon support at the early morning low and I'm suspicious that it might try to make a bid to fill yesterday's opening gap up near $34. If this Rectangle high of 33.15 should get taken out to the upside, that would put a target of 33.98 IN PLAY, right near yesterday's open (33.93) and high of the session (34.05).

Math:

33.15 - Highs of the Rectangle
32.32 - The more conservative of the 32.31 and 32.32 lows

33.15 - 32.32 = 0.83 points of upside on a breakout. 33.15 + 0.83 = Target: 33.98 IN PLAY.

This Rectangle in the 5-Minute Chart is a VERY weak pattern, going up against the H&S Top in the Hourly Chart. Targets against the dominant trend (Hourly chart trumps 5-Minute chart) are less likely to get MADE so we'll see, if 33.15 gets taken out to the upside.



On Wednesday, AZO fended off the MACD "Kiss of Death" signal (explained below), and CLOSED at a new high for the move, inside this channel. That's impressive, at least to me, when a stock can fend off a signal like that, and we know that AZO has been very strong, technically.

After that strong performance, a Citi analyst downgraded AZO Wednesday afternoon, after the close. AZO opened down in yesterday's strong open for the general market, so I went with the strong performance in the chart, and bought it for $165.42. AZO rallied smartly to $168.19, looking like it would make a bid for the top of the channel, but then...

Tank...tank...tank... Curses! LOL. As I said, I threw it in for about $160 gain, and after my frustration with not getting my short trade off in GG, I took a break for awhile.

When I looked at AZO again in the afternoon, it had gone into a SERIOUS tank and had taken out the bottom of the channel. Whoa! The upward slope of the channel is 0.6909, so the bottom of the broken channel will come in today, April 3, at 161.628. The low of Wednesday's strong candle, when AZO fended off the "Kiss of Death" MACD signal, was 161.502, so if AZO should rally today, it should meet with some resistance there, at 161.502-161.628, on up.

The "Kiss of Death" signal is given when the MACD is below its signal line, tries to rally back above the signal line, "kisses" it, and fails. It can "come close," or go slightly above it, or nail it, but the key is that it FAILS, and price confirms the failure by moving to the downside.

The second red arrow wasn't a "kiss" since the effort fell short of the signal line before it turned down again, but "close enough." It made a second effort to turn higher and get above the signal line, but FAILED.

Conversely, in early March, the MACD had formed a Bullish Inverse H&S, came back and slightly below its signal line, and then WHACK, like a "slap shot" in hockey. In this particular case, we had one of those "perfect marriages" between great technicals and great fundamentals. AZO exploded to the upside on earnings out of the Bullish Inverse H&S and Bullish Slap Shot postion in the MACD and has been bullish since then, climbing its way through the Rising Channel.

Until yesterday.

GG, HUI, And GDX

From yesterday morning, in the Comment Section:

"Basis the daily chart in GG, the 144/233RSI's just gave a Buy Signal on the print of 34.20, a penny above yesterday's high of 34.19, which is a "Buy Pivot," so that's looking bullish. Yesterday's low of 32.57 would be the stop loss for that particular signal, and a print below 32.57 also would break the putative 32.50-32.57 neckline, so we'll see on that, too.

I'm not going to short it today since that's looking pretty strong."

GG still is looking like a H&S Top. The 34.89 high of the Left Shoulder wasn't taken out yesterday, although it was close. The high on the session was 34.83. The volume also looks right for a H&S Top: highest in the Left Shoulder, next highest in the Head, then lowest in the Right Shoulder. The Left Shoulder should be wider than the Right Shoulder and so far, that's alright, but GG would need to break the neckline fairly soon.

Yesterday's action in the HUI, though, was much stronger than the action in GG.


The HUI took out the high of its possible H&S top and closed above the top of the putative Bearish Wolfe Wave! While that still "could be" some sort of upside fakeout, I'm not going to assume that. I'd have to see it get reversed to the downside.

The GDX had a strong day, but it didn't make a new high with the HUI, so that's a non-confirmation at this point. Prior to the HUI moving to a new high yesterday, it looked like the GDX at least would fill the 35.15 gap which I would like to have seen, but Ms. Market doesn't do what Melf would like. LOL. The GDX simply could break out from here and leave that gap unfilled.

Overall in the GDX, this a nice 8-month base for an upside breakout into the 39's, and above. The 50 day moving average made a bullish cross above the 200 day moving average on March 24, so it's good to go from that standpoint. We'll see if it can confirm the breakout in the HUI.

EDIT: In the GDX, note the Bearish Rising Wedge pattern, in red. "Rule of Thumb" when the pattern breaks down is that it will return to the bottom of the wedge, or very close to that. There's no "always" with these things, and this is a good example of that. The GDX got only to 29.25, well above the 27.15 low of the wedge, then went into the Bull Flag pattern, in blue. When the Bull Flag broke out to the upside, it trumped the Bearish Rising Wedge target of 27.15.

HUI And GG

GG gapped higher at the open and printed a high of 34.19, right at the bottom of the Bear Flag in the daily chart. It came off that high rather quickly, and I re-entered my short position at 33.71. GG continued lower, but the HUI and stocks like AEM, in particular, looked very strong, so I covered my short at 33.14, or so I thought. I hit the "Buy" button instead of "Buy To Cover" so I was both long and short the stock. Duh. So, I "Bought To Cover" AND sold, at 33.08. Try to hit the right buzzer, Melf! Sheesh...

GG continued to go down and broke the neckline, but it didn't take out the 32.50 low, the first data point on the neckline. GG printed a low of 32.57, then rallied back toward UNCH where I shorted it again, at 33.47. I had about $2,600 of house money to play with from the morning trade and from Monday's trade, but I wasn't about to give it all back. Stop: fifty cents above my entry. I got stopped out.

This still could be a H&S Top in the hourly, which might require a redraw of the neckine: the 32.50 low and yesterday's 32.57 low. We'll see.

In the daily chart, GG is "betwixt and between." It's broken out of an Ascending Triangle on a Breakaway Gap, but the pattern since then appears to be a Bear Flag, the bottom of which came in yesterday at 34.184. As I mentioned above yesterday's early morning high of 34.19 was smack on that trendline, so it was a trendline validation, and that refusal there did lead to some downside.

But, also notice that GG found support at the top of the Ascending Triangle, which is why I say that it's "betwixt and between" (resistance and support).

Ascending Triangle breakouts like this one in GG generally are bullish, and this also was a Breakaway Gap breakout, but Ascending Triangles can morph into Bearish Rising Wedges (see Morph line), which is exactly what the S&P did on its false breakout into the January 6, 2009 high. This Bear Flag showing up right here in GG also is an indication of that possibility, but GG obviously needs to break down below the neckline of the H&S Top in the Hourly chart, which also would put it back below the top of the Ascending Triangle in this daily chart.

A breakdown likely would fill the gap and possibly tag the 50/200 Day Moving averages, which are trying to make a Bullish Cross. The 50DMA, currently at 30.14, is the dotted green line; the 200DMA, currently at 30.58, is the dotted red line.


This is a better illustration of the Ascending Triangle (in purple), which possibly is morphing into a Bearish Rising Wedge, and this also shows the possibility of a large Bearish Rising Wedge (the pattern in blue).

The H&S Top possibility in the HUI still exists. If that's the case, yesterday was a move higher to form the Right Shoulder, then the 314-315 putative neckline will break. The high of the Right Shoulder should not go above the 334.33 high of the Left Shoulder, and the Right Shoulder should be narrower than the Left Shoulder, so the HUI should get going to the downside today or tomorrow if this is a valid H&S Top, I should think.

Gain: about $150. I worked hard for that money. LOL.