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.

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.

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.

Fri, Aug 31: /SI, /GC, MA. Reaction to Bernanke.

The New York equity markets rallied today, Fri Aug 31, reacting to a non-committal speech (re: further quantitative easing [QE]) by Ben Bernanke at Jackson Hole with moderate gains of about half a percent.

There was more drama in the precious metals markets, as might be expected given these securities' recent use as betting vehicles on QE. The brightest fireworks happened in silver futures (/SI), which rallied to close right on the resistance point of a robustly-defined, 15-month price channel.

/SI. Jan 2011 to present. Daily candles.

Of note is the particularly robust definition of this 15-month channel. The upper line, to a dime or less, connects the intra-day highs of May 1, 2011 (the multi-year high in silver) and two subsequent local maxima (mid-Aug 2011 and late-Feb 2012). The lower parallel line connects a few local minima, again to remarkable precision, and was only violated during silver's catastrophic sell-off in September 2011, and then only on an intra-day basis.

In short, this price-channel set-up is about as elegant as might be imagined. But that does not imply that today's close of $31.79 is destined to be another local maximum; price may break through on its bullish momentum, in which case a continuation of the rally is likely, possibly after a throwback to today's price.

Gold futures (/GC) also rallied today. Further quantitative easing risks debasement of paper currencies like the US Dollar, and so the price of gold (which is quoted in USD, after all) stands to gain. Today's price action propelled gold futures through the resistance end of a three-month price channel. On the four-hourly-candles chart, gold is further above its 200-period simple moving average (SMA) than it has been since the winter.

/GC. Dec 14, 2011 to present. 4-hourly candles.

Mastercard Inc (MA) has quite intriguing price action on its daily-candles chart: volatility is sharply reduced over the past month, price is struggling to hold the support of a two-year channel, and value is about as close to the 200-period SMA as its been in 18 months. All three observations suggest that bears are poised to get the upper hand, although any pull-back is likely to be temporary, with price action having been above the 200-period SMA since January 2011.

MA. Sept 2010 to present. Daily candles.

Thurs, Aug 30: AAPL, CTRP, FSLR, VXN

Markets are somewhat more volatile today, in anticipation of tomorrow's Jackson Hole speech by Fed chairman Ben Bernanke.

Apple (AAPL) shares have broken below a well-formed one-month price channel that had propelled the shares upward by 20 percent. Such a violation of channel support is not necessarily bearish, however. An important consideration is the slope of the channel, with violations of steep channels more likely to bring about consolidation rather than reversal.

AAPL. July 23 to present. Hourly candles.

Ctrip.com International (CTRP), a regular of these pages, appeared strongly bullish as recently as two days ago. Today's price action, however, has brought shares of the Chinese online travel agency to below a price channel encapsulating the last fortnight of data. The technical picture is not unlike that of AAPL above -- i.e. the violation of support from a steeply up-sloping channel -- and the outlook for consolidation is similar. The hawk-eyed reader might notice a short-lived but interesting throwback to the violated channel, occurring around midday today; this blog recently discussed throwbacks with regard to Dentsply (XRAY).

CTRP. Aug 6 to present. 5-minute candles.

First Solar Inc (FSLR) has reversed in dramatic fashion today. The shares rallied very strongly after a well-received earnings report at the beginning of the month, but for the week up to and including this Tuesday, had ground only modestly higher each day on decreased volatility. Such a combination -- token gains on sharply decreasing volatility -- is often a red-flag of forthcoming volatility expansion and, often, sharp declines.

FSLR. Aug 6 to present. 5-minute candles.

The implied volatility on NASDAQ-100 options (VXN) is today consolidating immediately below the resistance side of a 3-month price channel. Per the CBOE, the VXN "measures the market's expectation of 30-day volatility implicit in the prices of near-term NASDAQ-100 options. VXN is quoted in percentage points, just like the standard deviation of a rate of return, e.g. 19.36."

As such, the VXN indicator is analogous to the VIX, which tracks implied volatility on S&P500 options; and VXD, which provides a reading of implied volatility on DJIA options. Of note is that the measured implied volatility is of options tracking the indices themselves, not a weighted measure of implied volatility on the options of the index-constituting securities themselves.

While VXN price action is just below 3-month resistance, VIX and VXD have already broken through their analogous 3-month channels. (Charts of VIX and VXD are not shown.) 

VXN. Dec 13, 2011 to present. Hourly candles.

 

Tues, Aug 28: ALTR, CTRP, EA, KFT, XLNX

Markets continued to flatline on Tues, Aug 28, although the charts of several securities were quite interesting.

Altera Corp (ALTR), perhaps the quintessential NASDAQ-100 company (it makes semiconductors, is based in Silicon Valley, and has its headquarters on "Innovation Drive"), has penetrated price-channel resistance on both the daily-candles and hourly-candles charts. From the daily-candles chart, price action above $37.5 would be bullish, that price being approximately the August high.

ALTR. Jan 2011 to present. Daily candles.

ALTR. Dec 12, 2011 to present. Hourly candles.

Ctrip.com International (CTRP) continues to look bullish despite last week's 20 percent rally. From the 5-minute candles chart, price action is consolidating near the top of its recent range and appears to be forming a bull pennant pattern. Switching focus to the hourly candles perspective, price is continuing to consolidate beneath a six-month trendline.

CTRP. Aug 2 to present. 5-minute candles.

CTRP. Mar 1, 2012 to present. Hourly candles.

The daily candles chart of Electronic Arts (EA) is showing an almost-completed throwback to a recently-penetrated, nine-month price channel. This blog very recently covered another instance of a throwback, occurring in shares of Dentsply (XRAY).

EA. Mar 2010 to present. Daily candles.

Kraft Foods Inc (KFT) has quite the spectacular four-year, daily-candles chart; nearly all price action since May 2009 is contained in a single, well-fitting price channel. Notably, price behavior during the past two sessions is hugging the channel's resistance end.

KFT. Aug 2008 to present. Daily candles.

 Xilinx Inc (XLNX), a NASDAQ-100 component in the specialized semiconductors industry, is testing the resistance of a nine-month price channel. A break above approximately $34.16 would be bullish.

XLNX. Dec 12, 2011 to present. Hourly candles.

Fri, Aug 24: CTRP, LIFE, SPLS, XRAY

US Markets closed the week with gains, with the S&P500 up 0.7 percent to 1411.

Ctrip.com International (CTRP), the Chinese travel agency and NASDAQ-100 component that was highlighted on these pages a few days ago for bullish potential, exploded higher during the week. Price action accelerated upward in capitulatory buying that suggested a short squeeze, and volume was heavy. The advance finally halted on the 24th at a six-month trendline.

CTRP. Jan 19, 2012 to present. Hourly candles.

Drilling down to the 5-minute candles perspective on CTRP, the rally's acceleration is clearly visible. It's quite interesting to observe how bulls pounced just upon the stock's upward break from its 15-day, upward-sloping channel. Such action confirms that the channel was a valid model of the security's support and resistance levels; as price breached resistance (i.e. the channel's upward boundary), new demand materialized and the velocity of price appreciation increased.

CTRP. July 31 to present. 5-minute candles.

Life Technologies Corp (LIFE), a NASDAQ-100 biotech, is tightly consolidating immediately under the resistance side of a 3-year price channel, a bullish development. A break above this month's highs of approximately $47.50 would signify a successful channel break and be a significant bullish omen.

LIFE. Aug 2008 to present. Daily candles.

Staples Inc (SPLS), the office supplies retailer, is in a precipitous post-earnings sell-off that commenced in mid-August. The bearish move has brought shares to the support zone of a 4-year channel. Caution is particularly warranted with regard to this set-up, though; the channel is characterized by violations that, while small, can nonetheless cause considerable pain for the leveraged hedgie. For instance, the local minimum of Oct 2008 strayed below the price channel boundary by about fifty cents.

SPLS. Aug 2008 to present. Daily candles.

A zoomed-in appraisal of SPLS confirms the potential for a contrarian long trade. Price action is hugging the support of a 6-month channel, and a capitulatory break below could potentially evolve into a bear trap and subsequent short-squeeze rally.

SPLS. Dec 8, 2011 to present. Hourly bars.

Dentsply International Inc (XRAY), a dental instruments and supplies manufacturer and NASDAQ-100 component, is exhibiting a phenonemon that this blog finds particularly interesting: a throwback to support, alternatively known as the kiss of death. This occurrence is fascinating as it powerfully showcases the remarkable tussle between fear and greed, bulls and bears, that is the essence of price action. Whereas market participants' dominant sentiment was recently sufficiently powerful to overtake a support or resistance area, a surge of the opposite sentiment is on display during a throwback.

The hourly candles chart of XRAY shows the security breaking through a downward-sloping channel in early August. The channel, depicted below in grey, was particularly well-formed; the lines touch several local price extrema to the penny, and the eventual break was sufficiently significant to catalyze a particularly vertiginous one-day rally. On August 23rd (the second to last day of price action in the below screenshot), however, price retraced all the way back, with the intraday low falling on the price channel boundary: the throwback!

XRAY. Dec 8, 2011 to present. Hourly candles.

Thurs, Aug 23: BA, DELL, KO, WCRX

Markets on Aug 23 continued their reaction away from 4-year highs, with S&P500 futures notably breaking below 1400 although closing above that level.

Boeing (BA) was a considerable laggard on the DJ Industrial Average, falling 3.3 percent in response to a cancellation of Boeing 787-9 orders by the Australian airline Qantas. The decline brought BA to just above a significant, 3-year price channel. The channel support may not prove durable, though, and a break by $2-3 is a definite possibility given the selling climaxes of about 12 months ago, which pierced the same channel by about that amount.

BA. Aug 2008 to present. Daily candles.

Computer maker Dell (DELL) is likewise experiencing bearish drama, falling to a 3-year low. On the hourly candles chart, meanwhile, DELL is at support from a 3-month channel. Although robustly defined, this channel is nonetheless suspect due to its quite moderate slope, which may make the trendline more likely to fail.

DELL. Aug 2008 to present. Daily candles.

DELL. Jan 27, 2012 to present. Hourly candles.

Coca Cola (KO) is also interacting with support from an approximately quarter-year price channel. Unlike DELL's channel of a similar time frame, in which both boundaries are defined by at least three points, KO's channel is formed in decidedly more minimal fashion and, as such, is less likely to produce durable support.

KO. Dec 7, 2011 to present. Hourly candles.

Warner Chilcott (WCRX), the pharmaceutical company and NASDAQ-100 component, has pierced above a four-month price channel, albeit rallying through the resistance on only moderate volume. Price action performed a similar feat last week, but that rally fizzled and produced a bull trap, which colors this recent bullish move in a similarly suspect light.

WCRX. Apr 16, 2012 to present. Hourly candles.

Baidu (BIDU) in a sharp sell-off

As S&P500 futures flirt with the 1400 mark in today's session, Baidu (BIDU) shares are continuing their four-day sell-off in earnest. The last few minutes suggest capitulation.

The one-minute candles chart shows the marked nature of the last hour's high-volume selling. Shifting perspective to the daily candles chart, significant price channel support is still considerably distant, just above $105. This two-year vantage point also reveals that price has failed to hold the 200-day simple moving average, which the August rally had just managed to take.

BIDU. Aug 22 to present. 1-minute candles.

BIDU. Jan 2011 to present. Daily candles.

Wed, Aug 22: AAPL, GC, MA

Markets today, August 22, were highlighted by the release of Fed meeting minutes, which significantly increased the market's assessed likelihood of a further QE round, causing stocks and bonds to rally.

Apple (AAPL) continues to remain in the spotlight. Just two days ago, the firm became the most valuable public company in (meaningless) nominal terms; adjusted for inflation, the Microsoft of the 1990s still reigns. The hourly-candles chart of AAPL shows the stock is intensifying its rally, having broken above an ascending, three-month price channel on Monday, on high volume to boot. Driving demand is, of course, the forthcoming iPhone 5 unveiling, estimated to occur on September 12. The lead-up fortnights to past iPhone launches have not witnessed parabolic price ascents, though, which colors recent price appreciation in a risky light.

AAPL. May 1, 2012 to present. Hourly candles.

Gold popped today, continuing a rally from $1620 an ounce that began yesterday, with the rally naturally spurred by the increased likelihood of further government asset purchases, a move that is widely interpreted as a debasement of paper currencies. There is likely to be selling pressure just below $1680, although it may prove quite short-lived as the medium-term outlook for gold appears bullish.

GC. Dec 5, 2011 to present. Hourly candles.

Mastercard (MA) shares, meanwhile, are setting up for a pierce of a two-year price channel; recent price advances have occurred on low volume, and the rate of appreciation is diminishing. It may not be an opportune moment for shorting MA, though. Breaks of relatively steep, upward-sloping trendlines often do not lead to outright price declines but merely to sideways consolidation. Investor sentiment remains bullish: MA is still somewhat above its 200-day simple moving average and last dipped below the 200SMA in January 2011.

MA. Aug 2008 to present. Daily candles.

Altria (MO). Been dying to own shares of a cigarette maker?

Altria Group (MO), the company formerly known as the Philip Morris Companies Inc., has arrived at price channel support on the hourly candles and 5-minute candles charts. As technical analysis is generally agnostic with regard to company fundamentals and product, this blog shares this development despite what many consider to be the company's deplorable industry (cigarettes, addiction, premature death: take your pick).

That said, MO's steep sell-off over the past two sessions, occurring on high volume, is certainly a cautionary signal. Many consider distribution days as dark omens, but not necessarily as signals of imminent breakdown.

MO. Dec 5, 2011 to present. Hourly candles.

MO. July 25 to present. 5-minute candles.