Friday, December 28, 2012

Russell 2000 futures (TF) tightly bound by a price channel

DEC28 1122EST. Markets have been buffeted over the past several trading sessions by news concerning the US fiscal cliff. Yet despite the market turbulence, including the dramatic Dec 20th after-hours sell-off in index futures, recent price action in the Russell 2000 futures contract (TF) has conformed robustly to a simple price channel model.

TF (Mini-size Russell 2000 Index Futures). Dec 18 to Dec 28, 2012. 15-minute candles.
As can be seen in the above screenshot, price action between Wednesday, Dec 19 and today fits entirely within a single price channel, shown in dashed red. The channel is robustly defined, with 5 touches of the lower support line -- one of these being the nadir of the Dec 20th after-hours capitulation -- and 3 touches of the upper resistance line.

A break of the upper resistance line would be bullish. Nonetheless, the news-driven (re: the fiscal cliff) nature of today's markets, with the same expected for Monday, Dec 31, means that technical trading signals are riskier than normal.

Monday, December 24, 2012

Lam Research (LRCX) consolidates under long-term channel resistance

DEC24 1424EST. Lam Research Corporation (LRCX) has been consolidating for the past fortnight underneath the resistance trendline of a well-defined, two-year price channel, shown below in dashed red. Such consolidation is sometimes the precursor of a bullish advance.

Lam Research (LRCX). Sept 2010 to Dec 2012. Daily candles.

The upper line of the two-year channel happens to currently coincide with the 200-day simple moving average (SMA), shown above in dashed light-blue. Below the price graph in the above screenshot is an oscillator that measures the difference between price and the 200-day SMA. As the viewer can see, the oscillator is currently hugging the zero level, after having recently bounced lower from that level. Such reaction away from a resistance level followed by consolidation is sometimes a precursor to to a bullish break above resistance.

In other words, the behavior of the oscillator (which in turn measures the relationship between price and the 200-day SMA) confirms the expectation that LRCX *may* be poised for a bullish advance. Caveat emptor: until Lam Research breaks decisively above the resistance trendline / 200-day SMA on relatively high volume and holds at those elevated prices, the bullish trader might be advised to wait.

Lam Research, a NASDAQ-100 component, is a supplier to the semiconductor industry.

Herbalife (HLF) continues extremely steep sell-off

DEC24 1357EST. Herbalife (HLF) shares have been in the press recently, and not in a flattering way. Late last week, the front page of the FT's Companies and Markets section carried the news that Bill Ackman, the hedge fund manager, had begun a public campaign of labeling the company as a "pyramid scheme". Ackman was also reported as having a large short position in the shares. The result of all this attention: HLF is in a monstrous free fall, down from an intraday high on Wednesday, Dec 19 of $43.2 to an intraday low today, a mere four trading days later, of $24.24. That's a loss of over 43 percent.

The four-day chart of HLF, produced below, shows a pretty price channel (admittedly in a Shadenfreude sense) encapsulating all price action (except for bits of two candle tails on Friday midday). As the careful viewer might notice, an analyst armed with only Wednesday-Friday price action would be able to correctly forecast today's intraday low quite accurately.

Herbalife (HLF). Wed, Dec 19 through Mon, Dec 24. 5-minute candles.

Herbalife cannot keep falling at this rate forever. The first milestone for the bulls would be a break above the 4-day channel's upper resistance trendline, followed by a fresh intraday high on relatively strong volume. Of course, HLF might keep descending further, within a new, less-steeply sloped channel.

Friday, December 21, 2012

S&P 500 futures (ES) collapse over 2 percent in a single minute

DEC21 0032EST. This evening brought high drama to the financial futures market. Within the narrow scope of a single minute, the benchmark financial futures contract -- the E-mini S&P 500 (ES) -- collapsed over 2 percent, falling from a reading of 1424.5 at 19:17:59 CST to only 1401 at 19:18:59 CST, and diving as low as 1391.25 within that fateful minute. The contract recovered most of that drop in the subsequent minute.

The impetus, of course, was Capitol Hill drama concerning the fiscal cliff.

The chart of the whole convulsion, shown below, is eerily reminiscent of the May 2010 flash crash.

ES (E-mini S&P 500 futures contract). Dec 20, 2012, 18:00 CST to 20:00 CST. 1-minute candles.

Teva Pharmaceutical (TEVA) threatens to pierce 7-month channel support

DEC21 0013EST. Teva Pharmaceutical Industries (TEVA) has today withdrawn to within a dime of 7-month price channel support, shown in the screenshot below as a dashed red line. This is the NAZDAQ-100 component's second recent visit to this support line -- the last occurred with Monday's (12/17) intraday low of $37.83. As such, penetration of the trendline is somewhat more likely, in which case TEVA might be a sound candidate for a short position.

TEVA. Apr 24, 2012 to present. Hourly candles.

Thursday, December 20, 2012

Sturm Ruger (RGR) breaks above a steeply declining two-week channel

DEC20 0020EST. Firearms manufacturer Sturm Ruger (RGR), notorious in the wake of the recent tragic school shooting in Newtown, CT, has today rallied through the resistance line of a steeply declining two-week price channel.

This blog notes the price action in Sturm Ruger while maintaining a respectful non-engagement regarding the political debate about the role of guns in society.

RGR has declined aggressively over the past two weeks, losing about a third of its value from the Dec 4th high of $59.82 to the Dec 18th low of $40.00. Most of the decline occurred before the Newtown tragedy of Dec 14.

As already mentioned, today's price action broke through the resistance trendline of the fortnight-long channel, shown below in dashed red. Such a break sometimes brings further price appreciation; bullish sentiment would be strengthened if price action proceeds above today's intraday high of about $44.3.

RGR. Dec 4 to present. 5-minute candles.

Intuitive Surgical (ISRG) sells off to 5-month channel support

DEC19 2356EST. Intuitive Surgical (ISRG) experienced a pronounced sell-off today, declining 7 percent intraday before rebounding somewhat to close down 5.7 percent. Volume in the NASDAQ-100 component was a full 6 times greater than its average daily turnover.

Remarkably, today's intraday low of approximately $508 coincided quite precisely with the support trendline of a 5-month price channel, shown below in dashed red. 

ISRG. July 10, 2012 to present. Hourly candles.

Tuesday, December 18, 2012

KLA-Tencor (KLAC) rallies through 5-month channel resistance

DEC18 2128EST. NAZDAQ-100 component KLA-Tencor Corporation (KLAC) has today rallied through the resistance trendline of a 5-month price channel, shown below in dashed red. The price action is suspect, however, as it occurred on anemic volume.

KLAC. July 16, 2012 to present. Hourly candles.
Shares closed just below $47.90, which is a horizontal resistance level corresponding to intraday highs on Nov 12 and Dec 11. A rally beyond $47.90 and into the $48s might signal that the break above KLAC's 5-month price channel has at least some staying power.

C. H. Robinson (CHRW) pierces 2-year channel resistance

DEC18 2053EST. Shares of C.H. Robinson Worldwide (CHRW), the logistics firm and NAZDAQ-100 component, have today pierced through the resistance trendline of a 2-year price channel. The break occurred on somewhat higher volume than average (1.4M shares vs. a 3-month average of 1.2M). In the screenshot below, the channel is shown in dashed yellow, and it stretches back to October 2010. C.H. Robinson also reached and closed at a 6-month high.

CHRW. Sept 2010 to present. Daily candles.
Zooming into the hourly candles chart, CHRW appears to present two potential buy points. One would be at fresh highs (just above $63.85), especially if reached within a bullish overall market environment. Another would be on a retracement to a 2-month trendline, shown below in dashed grey, which would coincide with a price of around $62.85 or just below. A sound stop-loss point might be underneath the 5-month price channel, shown below in dashed red.

CHRW. July 16, 2012 to present. Hourly candles.

Monday, December 3, 2012

S&P 500 futures (ES) near support from their 2-week price channel

DEC03 1453EST. The e-mini S&P 500 index futures contract (ES), a proxy for the S&P 500 index, is approaching support from a two-week price channel, shown below in dashed red. This fortnight-old channel represents equities' collective recovery from their post-election sell-off. Today's intraday market action has been negative, with the ES declining from a pre-market high of 1424, and the current price level of about 1410 is only some 5-8 points above the two-week channel support level.

ES. Nov 9, 2012 to present. 15-minute candles.
Looking again at the above screenshot, it's worth noting the behavior of the oscillator that is located below the price graph. This oscillator measures the difference between price and the 200-period simple moving average (in this case each "period" is a 15-minute increment). Price is currently some 5 points below the 200-period SMA, but if price action was to decline some 5-10 points further in the next several hours (before the value of the SMA can significantly change), the reading on the oscillator would be in the vicinity of negative 10 to negative 15. Such a value would match the lows of the oscillator from Wednesday, November 28 (circled in yellow above), which was the most significant market pullback over the last two weeks.

Glancing again at the price graph, a further argument for 1405 support is provided by today's pivot points. Pivot points are the five colored horizontal lines overlaid on today's price action, and they represent estimated horizontal support / resistance levels that are calculated on the basis of the prior day's high, low and close. According to Technical Analysis by Kirkpatrick and Dahlquist (2011; pg 261), floor traders often incorporate pivot points into their trading strategies, which in turn contributes to the probability that the formulas' predictions are fulfilled.

Soybeans (ZS futures and SOYB) approach channel resistance

DEC03 1159EST. Soybean futures (ZS) and their corresponding exchange traded fund, the Teucrium Soybean Fund ETF (SOYB), are approaching resistance from well-defined three-month price channels, shown below in dashed red for both securities.

ZS. Aug 31, 2012 to present. Hourly candles.
SOYB. Aug 13, 2012 to present. Hourly candles.
NB: Ad Astra Hoya identified the November 16th low in both ZS futures and the SOYB ETF using these same price channels.

Thursday, November 29, 2012

Enjoying Horizon's Q400 turboprop on a trip to Portland

Thanksgiving Day saw me taking a quick journey between the Bay Area to Portland, and as the journey involved Horizon, my favorite US regional airline, I've composed this brief (and fawning) documentation.

I arrived at San Jose's Norman Maneta International Airport some thirty-five minutes before my scheduled departure time of 6.15a. After an expeditious transit through airport security, I arrived at the gate area where N400QX, a Bombardier Q400 turboprop aircraft in the colors of the University of Idaho Vandals, was about midway through the boarding process.
This trip's routing: SJC-PDX, overnight, PDX-SFO
View forward during the boarding process from exit-row seat 1B
Catering on the flight
The flight itself was a joy. From seat 1B, the forward exit row seat, I enjoyed some brief conversation with the flight attendant in her jumpseat and, after napping for a few moments after our sprightly takeoff, I dug into some markets-related reading (an outstanding textbook by Kirkpatrick and Dahlquist) for the majority of the flight. On the right side of the aircraft, a radiant melange of red and orange combined to render the sunrise, but being in a left-side aisle seat, I was in a decidedly suboptimal spot to enjoy it.
In-flight reading
University of Idaho Vandals -liveried tail and aft fuselage

University of Idaho Vandals -liveried forward fuselage
N400QX landed under overcast skies on runway 28L at PDX, with our short final approach taking us over the aloft PDX, where I'd be staying on this trip. The stay in Portland did not disappoint. Although Thanksgiving is naturally a family affair and my trip to Portland was decidedly solitary in nature -- its purpose being to facilitate strategic, introspective thinking and writing with respect to work -- I'd be enjoying the archetypal turkey feast with a gathering of extended family on the next day, Friday, in the Bay Area. Thanksgiving Day itself was all mine, and fruitful.

I journeyed back to San Francisco on Friday morning, with the flight being nothing short of spectacular. The day began well before dawn, with a few hours' work logged before I departed the aloft hotel at approximately 9.30a. The cosmos smiled upon me that morning and bestowed the next minutes with impressive efficiency: I arrived curbside around 9.40a, transited security in less than two minutes thanks to an empty TSA Pre-Check lane (while the hordes seemed to be queuing quite lengthily in the adjacent lanes), and was among the first passengers to board the 10.15a departure to SFO, again operated by a Horizon Q400 aircraft.

Slightly before midway through the flight, as I was savoring the heady texture and chocolatey taste of a Ninkasi Oatis oatmeal stout, the microbrew of the month at Horizon -- and get this, poured free of charge to economy class passengers -- Mt. Shasta came into view somewhat in the distance. Moments later, the snow-capped peaks of the Trinity Alps beckoned spectacularly just below (the maximum cruising altitude of the Q400 is only 25,000 feet). Some time later, now into an initial descent, we overflew Santa Rosa, with the Charles Schulz Sonoma County Airport (STS) clearly visible. But the best sightseeing came later still: a traverse off the western coast of San Francisco and the peninsula, before cutting across Redwood City to align with SFO's runway 28L approach.

Mt. Shasta in the distance
The Trinity Alps of northern California
Western San Francisco (Richmond and Sunset neighborhoods; Golden Gate Park)
Aircraft wing with Norcal mountains; rolling shutter effect is responsible for the distorted propellers

Seagate (STX) descends to support from a pair of price channels

NOV29 0948PST. Seagate Technology (STX) has declined in today's trade to $25.0 support from a pair of price channels: a 7-month channel, shown below in dashed red; and a 4-month channel, shown below in dashed yellow.

The 7-month channel is only minimally defined, however; it consists only of the essential 3 points. (Two points are necessary to define one channel boundary, and a third point is needed for the second channel line). As such, the probability for a rebound here appears, prima facie, to be somewhat diminished.

STX. March 15, 2012 to present. Hourly candles.

Wednesday, November 28, 2012

Chevron (CVX) gallops through 2-month channel resistance

NOV28 1931PST. Chevron Corp (CVX), a component of the 30-share Dow Jones Industrial Average, rallied through a robustly defined 2-month price channel in today's trade. The price action occurred on somewhat heightened volume: 7.0M shares, compared to a trailing 3-month daily average of 6.1M. The hourly-candles chart follows below.

NB: Price action on November 15, as seen in the chart below, had many features commonly seen in a capitulation; namely: the day's bearish sentiment penetrated below a well-defined trendline, volume spiked, and the decline's minimum occurred in the near vicinity of significant "round number" support (the day's low was only $0.66 above an even $100).

CVX. June 25, 2012 to present. Hourly candles.

Tuesday, November 27, 2012

Facebook (FB) rally continues into its 11th market day

NOV27 2040PST. Facebook (FB) shares are continuing a 35+ percent rally that began with shares below $19 on Monday, Nov 12. Ad Astra Hoya flagged the stock on Friday, Nov 9 with a headline noting that FB shares were approaching robust channel support.

Although FB shares have not closed higher on every single day over the last fortnight, the 5-minute candles chart below shows that price action remains firmly on the ascendent, and moreover still ensconced within a steeply-sloped, 2-week price channel.

FB. Oct 31 to present. 5-minute candles.
Zooming out to the hourly candles view of FB's history as a public company, i.e. since May 18th of this year, shares have climbed above a 3-month price channel, marked below in dashed red, and paused today just underneath the horizontal support of $26.73, which was the intraday low on July 26th and is significant because, on the following day, FB shares gapped lower by a few dollars.

Interestingly, today's intraday high was $26.50, which is still $0.23 shy of the horizontal resistance point. A push beyond $26.50, perhaps halting only a few pennies shy of $26.73, may be in the cards later this week.

FB. May 18, 2012 to present. Hourly candles.

Sunday, November 25, 2012

Marvell Technology (MRVL) consolidates and may rally

NOV25 1255PST. Marvell Technology Group Ltd. (MRVL) has spent the last month consolidating just beneath a 2-year price channel, shown below in dashed red. Should price action break through this channel resistance, shares would be well positioned to rally further.

MRVL. April 2011 to present. Daily candles.
Augmenting the bullish argument is the behavior of the difference between price action and its 200-day simple moving average (SMA), graphed in the above screen shot by the oscillator that's just below the price graph. In last month's precipitous decline, bearish sentiment brought price to over $5 below the 200-day SMA, matching the level of bearish sentiment of mid-August 2011, when price action formed a durable bottom. Both the August 2011 and October 2012 lows in the oscillator are circled in yellow above.

FLIR Systems (FLIR) kisses 18-month channel resistance on gentle volume

NOV25 1237PST. FLIR Systems, Inc. (FLIR), a producer of thermal imaging systems and a NASDAQ-100 index component, has cuddled up to resistance from an 18-month channel, shown in dashed yellow below. Bulls may be in for a one-night stand however; Friday's affair attracted only 177k shares of volume, against a daily average of around a million. Granted, it was an abridged encounter, with markets closing at 1300 Eastern for a tryptophan-tinged nap.

FLIR. April 2011 to present. Daily candles.

Baidu (BIDU) rallies from 2-year channel support

NOV25 0901PST. The ADRs of the Chinese search engine Baidu (BIDU) bounced on Friday (23 Nov) from the support of a nicely-defined 2-year price channel, shown below in dashed red. The rally has come after a November of intense selling pressure, and last week's nadir saw the stock at a more depressed level relative to its 200-day simple moving average (SMA) than has been seen in the last two years (as shown by the oscillator below the price graph).

BIDU. Nov 2010 to present. Daily candles.
The above daily candles chart also shows the security interacting with a more complex collection of three parallel 2-year trendlines, shown in dashed yellow.

Meanwhile, the hourly candles chart of BIDU, reproduced below, demonstrates that the current rally enjoys price channel support from an 8-month channel (shown in dashed red) and a 3-month channel (shown in dashed yellow). At last week's price minimum near $90, the oscillator measuring difference between price and the 200-hour SMA was likewise near its global low (over the chart's timeframe).

BIDU. March 12, 2012 to present. Hourly candles.

Friday, November 23, 2012

Silver (SI) rally powers onward

NOV23 0900PST. November's rally in precious metals, among them silver futures (SI), is witnessing another leg upward in today's trade. The contract is presently at 2-month price channel resistance, with the channel marked below in dashed red.

Of note: the red dashed channel is not particularly robust, being both rather minimally defined and with long stretches through "empty space." As such, price's current pause at the channel may be temporary; bullish sentiment may propel price higher, as it did earlier this week, when price broke through another 2-month price channel, marked below as a lightly dashed, grey line. Incidentally, the break of the grey channel provided an excellent buy point from which to partake in today's rally.

SI. Aug 27, 2012 to present. Hourly candles.
Note: equities traders can reflect their outlook on silver futures by taking a position in the SLV exchange-traded fund, formally titled the iShares Silver Trust.

Friday, November 16, 2012

Russell 2000 index (RUT) finds horizontal support

NOV16 1033PST.  The Russell 2000 index (RUT), along with the other principal equities indices, is enjoying a midday bounce of some 1 percent from intra-day lows.

The charting story here is that the RUT bounce has come from the well-defined horizontal support level of approximately 764-765, which was the index's local minimum on three separate occasions this summer: June 28, July 24, and August 2.

RUT. May 23, 2012 to present. Hourly candles.
Also noteworthy: the Russell 2000 is below its extended 2-month price channel (shown in red above), from which the index emphatically broke on Nov 14. On any forthcoming rally, the RUT is likely to encounter intra-day resistance upon reaching this channel; currently, that would suggest resistance in the neighborhood of 785.

Soybean futures (ZS) approach a buy point

NOV16 0911PST. Soybean futures (ZS) were the Wunderkind of the summer, rallying well over 40 percent between January 1st and the summer's drought-scorched height, but since topping off at $1789 in early September, the contract has given back about 23 percent.

ZS. Aug 26, 2012 to present. 4-hour candles.
The above chart depicts the past two months' decline, and a price channel nicely encapsulates nearly all the price action. Of note: today's two percent dip has brought ZS within a whisker of channel support, which might be expected in the $1360-1370 range.

NB: Equities traders can easily take bullish or bearish bets on soybeans through the SOYB exchange traded fund (whose formal title is: the Teucrium Soybean Fund ETF).

Thursday, November 15, 2012

Bristol-Myers Squibb (BMY) sells off to channel support

NOV15 2025PST. Shares of Bristol-Myers Squibb (BMY) have today declined to an appealing buy-point: the support of a precisely-fitting, 3-year price channel. The channel, drawn on the chart below with a dashed red line, is defined by four price extremes, which are highlighted in solid yellow.

BMY. November 2008 to present. Daily candles.
The lower portion of the screenshot shows an oscillator that is defined as the difference between price and its 100-day simple moving average. (The latter is drawn on the chart as a dashed blue line.) As such, the oscillator can be interpreted as an indicator of market sentiment. The current value of the oscillator, -2.45 (i.e. price is $2.45 below the 100-day SMA), is the lowest value since March 2009, suggesting that the stock is oversold.

Wednesday, November 14, 2012

Markets accelerate downward but the VIX volatility index lags

NOV14 1856PST. Markets declined briskly today, continuing in earnest a bearish move that began with President Obama's re-election last week. Two intriguing details:

1) The last week's downward "price velocity" -- the rate of price decline -- has been increasing relative to the past month of selling. As evidence of this, consider the hourly-candles chart of the NASDAQ Composite (COMP).

Price declines since late September have been contained by a well-fitting price channel, marked below in dashed yellow. In the last week, however, price action has been compressing ever closer to the channel's bottom support line and, in today's trade, has emphatically broken through.

COMP. March 1, 2012 to present. Hourly candles.
 2) Despite the markets' recording of fresh lows on increasingly bearish price velocity, the markets' principal measures of volatility are notably not at fresh 30-day highs. The volatility indices like the VIX (the CBOE volatility index based on options pricing for stocks of the S&P500 index) are, in the parlance of technical analysts, not "confirming" the indices' sharp moves lower, which somewhat increases the probability of a bullish reversal of the indices from present lows.

The hourly-candles chart of the VIX is below. The circled local maxima correspond to the circled price action events on the NASDAQ Composite (COMP) chart above. As the viewer can herself see, today's move by the COMP to fresh 3-month lows has not been matched by a corresponding rise in the VIX to a new 3-month high.

VIX. March 1, 2012 to present. Hourly candles.

Tuesday, November 13, 2012

JC Penney (JCP) dives toward channel support

NOV13 0932PST. When the Financial Times carries a story with the following tantalizing statistic -- that JC Penney (JCP) has a short interest level at 40% of the firm's outstanding shares, ranking it the second most shorted stock in the S&P500 -- there is surely a contrarian trade in the making.

JCP shares are in a very steep capitulatory sell-off; blood flows in the streets. More to the point, the shares are approaching support from a two-year price channel, which predicts support in the $17.4 area. If taking into account a two-day island reversal from August 2011, which briefly penetrated the channel's lower support line, support might be expected at the lower price of approximately $16.3.

The four-year chart of JCP follows.

JCP. Nov 2008 to present. Daily candles.

Friday, November 9, 2012

Facebook (FB) approaches robust channel support

NOV09 1201PST. Facebook (FB) shares are approaching support from a pair of well-fitting price channels. These forecast support at approximately $19.20, if reached today or near the open of Monday's trade.

The first channel encompasses all price action from June 5 through Oct 23, after which FB shares shot up on a well-received earnings report. This channel, in red below, is well-fitting; local minima coincide with the channel four times, and local maxima on two additional occasions.

The second channel, in yellow below, is defined by four local extrema. It contains all price action from Sept 5 through the present.

The chart itself depicts FB's entire trading history as a public company, i.e. all price action since the company's market debut on May 18, 2012.

FB. May 18, 2012 to present. Hourly candles.

Apple (AAPL) rallies this morning

NOV09 0733PST. A follow-up to this morning's post on Apple (AAPL). The security has broken through the resistance at $540 described earlier, and it is now consolidating underneath resistance at $547 from another 3-day channel.

Given today's strong rally thus far, the $547 resistance may be quick to break. In such an event, the next forecast resistance is at approximately $556-557 -- the bottom of the three-week price channel mentioned in today's earlier post.

AAPL. Past 3 days. 1-minute candles.

Apple (AAPL) may be bottoming

NOV09 0708PST. The five-minute candles chart of Apple (AAPL), showing price over approximately the past month, shows a capitulatory steepening of price action, which is often a precursor of a bottom and sometimes of a "V-shaped" recovery, to use that favorite term of recent political campaigns.

Two noteworthy points: First, price proceeded over most of the time period in a moderately-sloped sell-off, although it began to distance itself from the upper channel line over time.

Second, price violated the first channel's lower boundary and formed a new, steeper channel. And it's now hugging the upper boundary of that second channel.

AAPL. Oct 12 to present. 5-minute candles.

Thursday, November 8, 2012

QQQ (Nasdaq ETF) at 2-month channel support

NOV08 1039PST. Most indices, index ETFs, and financial futures are presently at or near significant channel support areas. After Barack Obama's re-election on Tuesday night, the markets have of course been selling off hard, and the present area might mark a low.

Below is a chart of the Powershares QQQ Trust (QQQ), i.e. the largest exchange-traded fund tracking the Nasdaq-100. A well-fitted, downward-sloping price channel encompasses all price action from September 17 to the present, save for an island-reversal day on Sept 26th.

Critically, price is currently right at channel support. Negative sentiment could always propel price lower still, setting up a relatively rare capitulation; that said, buyers do have a reason to step in here.

QQQ. Sept 17 to present. Hourly candles.

Wednesday, November 7, 2012

Apple (AAPL) approaches 4-year channel support

NOV07 0917PST. Apple is approaching support from a 4-year channel.  The channel is defined by four price action local extrema, circled in yellow. Only three touches would be enough to define a channel -- two points to form one line, and one additional point to define the second, parallel line -- and the fact that a fourth local extreme perfectly touches the channel adds evidence to its explanatory potential.

In zooming into the chart, the 4-year channel would be expected to today support AAPL near $549. In tomorrow's trade, the support would occur around $550.

AAPL. Nov 2008 to present. Daily candles.

Friday, September 28, 2012

Corn futures (/ZC) leap higher from price channel support

Corn futures (/ZC) have rocketed up 5.6% today, up exactly $40 per contract and presumably triggering the exchange's circuit breaker, as there have been no trades or price change for approximately the last three hours.

The bullish movement began at approximately the area of support from a 21-month price channel. (The channel is colored grey below.) Further support was provided by the "round number" $700 level, which price action almost reached.

/ZC. Nov 2010 to present. Daily candles.

Tuesday, September 25, 2012

Mon, Sept 24: /GC, /SI, GOOG

Markets closed slightly lower today (Monday, Sept 24). The S&P500 was off by 0.2 percent, while the NASDAQ underperformed due to a 1.3% dip in Apple shares, that index's highest-weighted component.

Precious metals are hinting at consolidation or perhaps even bearish moves after their heady advance of the last month, fueled by QE3. The gold futures contract (/GC) today closely hugged the lower support line of its 1-month price channel, usually a precursor of a shortly forthcoming violation.

/GC. Aug 20 to present. Hourly candles.

Meanwhile, the silver futures contract (/SI) has already today violated its 1-month price channel. An extension of the lower support line of the channel currently stands at about $34.9; thus a throwback to this channel support line, if it should occur in the next ten or twenty hours, may encounter resistance near the $35 level. ('Throwbacks' were discussed in this blog's Aug 28 post, for those wanting a refresh.)

/SI. Aug 20 to present. Hourly candles.
Perhaps the most notable price action today among widely tracked large caps belonged to Google (GOOG). Today's 2.1 percent rally brought the security to over $120 above its 200-day simple moving average, a level of bullish sentiment not seen in 20 months. Moreover, today's close places GOOG just a hair above the resistance of a price channel stretching back to January 2010. The channel is not robustly defined, however -- for instance, the upper resistance line has been untested since its inception, and the slope of the channel could be adjusted upward to fully enclose the lows of July 2010. As such, the trader should discount the channel's bearish implications, at least temporarily.

GOOG. Sept 2008 to present. Daily candles.

Thursday, September 6, 2012

Green Mountain (GMCR) surpasses key resistance

Shares of Green Mountain Coffee Roasters Inc (GMCR) are rallying strongly in today's (Thurs, Sept 6) exceptionally bullish overall market.

Catalyzing the broad market, in brief, is an announcement of new monetary easing by the European Central Bank; as of midday, S&P 500 futures are ahead by just under 2 percent.

The story in GMCR is not its rally per-se; rather, the stock has surpassed the resistance line of a key price channel on the hourly candles chart, which may fuel further price appreciation. The channel is robustly defined, connecting all major local maxima and minima since March, and was discussed by this blog on Aug 21. A line of the same slope also models support and resistance for a handful of candles from early May through late July. The last two weeks of price consolidation have, furthermore, occurred just below this channel resistance, giving the line further validity as a support / resistance model.

GMCR. Dec 19, 2011 to present. Hourly candles.
As long as price action stays above this channel (above approximately $24.5), the outlook for GMCR appears bullish. The next significant test for bulls will be the August high at $26.69.

GMCR. Aug 8 to present. 5-minute candles.

Wed, Sept 5: BIDU, CELG, LIFE

Baidu Inc (BIDU) shares exhibited noteworthy price action on Sept 5. On the 5-minute candles chart, the security is seen reacting away from 20-day price channel resistance on Tuesday, Sept 4, and subsequently falling further on the 5th, albeit remaining somewhat above a double-low at approximately $110.15. Shares of the Chinese search engine were recently covered on these pages, as the stock was sharply selling off on August 23rd.

BIDU. Aug 16 to present. 5-minute candles.
Celgene Corp (CELG) showed a break of channel support from the hourly-candles perspective. The violated channel is fairly robustly defined and stretches back by approximately three months. That said, price action is at its 200-hour simple moving average, rather than below, so the chance of continuing price consolidation is relatively high.

CELG. May 25 to present. Hourly candles.
Life Technologies (LIFE) appears to be breaking through 3-year channel resistance, albeit doing so in both slow motion and on low volume. These latter characteristics of the advance increase the odds of the analysis being predicated on a mis-drawn channel, which is quite possible as the current channel is of only a moderately sound fit.

LIFE. Sept 2009 to present. Daily candles.