Tuesday, September 27, 2011
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Off the Charts is a daily newsletter featuring the favorite technical trading set-ups of T3Lives's top contributors
While the SPY trades in this lower range, the best strategy that has been working is a 2-3 day strategy at oversold and overbought levels. Markets gapped up this morning on continued hopes of a Euro debt plan. Markets held the gap up and grinded higher most of the day until the last hour of trading when the SPY faded off highs, and traded into the day's gap. SPY closed the day up 1.12%. The SPY squeezed higher than the bears would have liked, but lower highs are intact, and one of these days, this range will resolve one way or another. This could be a tidy retest of the channel that could forecast another plunge, but we'll wait for price action to confirm.
This morning, most stocks gapped up into the first resistance level that was highlighted in either last night's OTC or today's Morning's Call with Scott Redler and Alix Steel. Today was the 3rd up day in the rally from oversold levels from Friday to today. What's next?
SNDK had a powerful move off of lows in early September. Since then, this stock has been able to sustain the recent strength as it powered higher. There is a macro downtrend line in place that SNDK tried to push through today, but was not able to close above it as the market was pressured in the afternoon. It would be constructive to see SNDK hold higher in this wide descending channel so it can continue moving higher. There have been decent moves this month in previous technology leaders like INTC.
Retailers have been holding up on the top half of their yearly trading ranges while the market tries to find its footing in its lower range. ANF is holding above the 200-day moving average but found some resistance today as it gapped up into a minor downtrend line. If ANF continues to hold above the 200-day moving average, look for a trade above $68/$69.
BIDU broke down early last week before the market. It has seen a severe move down and recent change in composure as it broke a multi-year uptrend line and closed below key support of the 200-day moving average. Today BIDU rallied into the 200-day (prior support becomes resistance) and gave a retest of the broken uptrend line before fading off of highs. It may take time, but it seems like more downside is in store for this previous leader.
VMW was on the "go-to" list but changed composure in early August and has not been able to gain much traction to the upside. $96 is clear resistance in VMW, and was not even able to rally to that level in the rally in the past 3 days. The 50-day and 200-day moving averages are curling down in this stock which is a bearish sign. VMW showed relative weakness to the market today, which closed positive, where as VMW closed down 1.87%. For the active trader, look for a cash flow short below the ascending trendline at $84/$83.50.
GE has a defined bear flag forming at lower levels on the chart. $14.72 is the low of the flag and $16.50 is posing as resistance. GE is trading below key moving averages, and if the SPY breaks the yearly low, GE should see further downside.
Yesterday, we saw a lot of oversold bounces in the most beaten up sectors. The OIH provided an 80/20 entry once it traded back through the previous day's low ($108.31). This morning, OIH gapped up into Resistance level 1, where it was prudent to take some of the trade and scale the remainder of the trade, in case there was further follow through. The OIH's are weak and the targeted day and a half long strategy didn't change our thoughts on a longer term basis. The trend remains to the downside for now and the OIH closed on its lows today. There are better stocks to key on for longs (look to stocks trading above key moving averages.) The bounces in the weak sectors (OIH, XLF, and XLI) are continually met with selling.
-Compiled by Vicki Haddow
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