Easier to stay long with financials at our backs

Having conviction on the long side (which is essential when it comes to buying pull-backs) is a lot less stressful when financials act this well.   We’re above all major moving averages now on the $XLF on daily and weekly.   Note this 15 area on the XLF has been a critical area for years.    Digestion here is normal and healthy.     Our guess is that once 15 is gnawed at a bit more, we’ll lift off from that level to the next resistance level at 17.     And if we pull-back in the digestion phase, first major support comes in at 14.

The Other Side

When $IWM broke 81 we wrote a post saying it was the big news of the day and that if bears wanted to push, this was the time.   Now it’s the other side — first test of the 50sma this year and if bulls want to hold, this is the time.

Divergence food for thought

Not sure how to interpret this chart (lack of belief in China growth?) but the divergence between $QQQ and the metal miners $XME hasn’t been this significant since 2008.    Our time-frame is too short to trade off such a chart but interesting nevertheless.   Even if you take out $AAPL out of equation the divergence is very significant as a $SPY/$XME chart shows  similar divergence.   Any thoughts?

Refiners coming into important zones

Refiners had a hard reversal on Friday and look like they want to test their respective 20SMA averages on daily.   Let’s take a look at our three favorites,  $HFC $WNR $TSO and their respective initial support zones.
WNR 17.6 range is the first initial support.   Note that this would be the first test of the 20sma this year.

TSO first support near 26.75

And HFC first support near 32.8

If they aren’t clearly trending down (following 20ema on 5 min intraday chart) we’ll try all three for support long buys, either a) waiting for reversal before entry with stop on low or b) bidding the aforementioned spots with around 0.5% stop.

To put it simply  bullish would be a bounce on the zones given in this post, and bearish would be no reaction on these levels as buyers shy away from initial support.

Refiners can sometimes act as decent market tells and with crude approaching $110 and $SPY at resistance we’re on the look-out for the possibility of at least a pause in the music.   Keep your eye on that empty chair.

Market hasn't gone anywhere but look at the move on these stocks

We have referred to this market as “benign” as a while now and one of the features of a kind bull market is even when the market sits and digests,  break-outs work.   Take a look at the last four freebies we gave out on the stream  $SLW, $IBM, $WLL, and $CLR.    Big moves in individual stocks while $SPY has done very little.
CLR was an alert in our newsletter but also a freebie on the stream for 84 break-out.

IBM has been on our list for weeks, and we mentioned many times on stream:

Just before we left for vacation we gave out this idea for SLW,  long on close with stop on lows of day.  Awesome continuation.

WLL 54 also given out on stream — and again, big move.

Market sits and does very little while individual set-ups work very well.   Definition of a benign market.

This is how we trade

We keep things very simple for our trading.   Every day after the close we manually scan through our universe of stocks looking for patterns to trade.   This is our homework and anyone can buy it for $44.76 a month.    We send our alerts out to our subscribers.   The next day we review everything that triggered, win or lose, whether we traded it or not, etc.
During the slow parts of the day we start writing the newsletter.   Right now we have taken day-trade profits in $AMZN $KLAC $ALTR long,  $WYNN short, and have small swing size positions on with hard stops that we’ll take into tomorrow if we don’t get stopped in the next 3 hours.
Our Sunday morning newsletter included all the alerts that we review today:
KLAC support was 49 or 48.5 overshoot. At 49 stock was trending lower without any pause, but finally green bar reversal on 48.5. Decent move back to the 20ema at 49 (overshoot often rallies back to primary support – that’s the first day-trade target).

ALTR 39.26 alert—found it’s footing just under and decent bounce back to S1 (day-trade first target).

We liked our chances with KLAC ALTR also because of SMH coming within pennies of our 33.8 support. The more support that hits at same time, the greater the chance of recovery.

WYNN short 112 at open we found impossible as it went on opening bar, bounced on S2, but gave good entry on bounce back to the 20ema and back to new lows.

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AMZN was the star of the day – but you needed some conviction on this one to buy the new high near the open. For those who hesitated stock gave second entry on pull-back to R1 at 188 and then great action to 190 which was first day-trade profits.  (Trend-line break was on our newsletter for Friday, and 188 was sent out Sunday morning — AMZN is one of the best trading stocks right now in the market).

Swing long as long as 188 holds.

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Every day after the close we manually go through our master list of 300 stocks to look for patterns. Sometimes on weekends we look for new names and do scans – FTI was a product of a scan. We often regret adding them after as we realize “there’s a reason the stock isn’t on our master list”. We wrote yesterday that FTI was not a good trading stock but 55 was big number. Decent swing candidate to keep an eye on on a close over 55, but crappy day-trade action at extended run and scum of 55.

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We don’t like surprises.  We like trading our pre-determined list every day and nothing else.

All charts are from E-Signal– our subscribers get a substantial discount on their service. If you’re interested please email us at info AT highchartpatterns DOT com

All about this chart

We are basing at the very important 135 $SPY area while trending higher on the 20ema on the 60 min chart.  However note that we have tested it three times already in three days — the more we test it the weaker it becomes.   If we revisit again any time soon good chance it will crack.

Sticky Level

The bulls couldn’t ask for better price-action thus far as the market is refusing to pull-back and instead is constantly digesting thru time and then making a leg higher.    We are at a sticky level– one we posted last week — the $SPY 134.8-135

Extended into a major resistance area but handling it well so far– the more we base near 135 the better the potential break-out will look.   We’ve mentioned for a while that our favorite sector right now is the $XLE — good bases in this sector and not extended (compared to market).     That’s the place we have been and will be focusing for near future.