July 2009 Archives

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...

I'm taking a little break. Look for posting to resume in the middle of August. Good trading to you all!

It continues to be a very tough market for the bears. They had a good opportunity to break the rally on Friday but that slipped away. They couldn't keep the market down today either after a weak start to the session. They've even let the QQQ recoup all of its losses from Friday's gap down and the Nasdaq is very close to accomplishing the same.

I still think we'll see these steep July trendlines broken in the near future but that doesn't mean we'll get a serious selloff. The indices could just go sideways and that would break those trendlines with little technical damage. In fact, I think we're seeing that now in the Nasdaq

No changes

This was an interesting session which got much more interesting after-hours. There was a distinct change of character in today's buying compared to the last few days of basically drifting higher. Today buyers were really motivated -- probably equal parts short-squeeze and fear of missing the rally kicking in. That buying lifted the S&P 500 away from its June highs and into clear breakout territory. It also pushed the Dow to a new 2009 high. But some earnings disappointments after-hours negated the bulk of the day's gains. So suddenly the very steep July trendlines are in jeopardy and some of the indices are in danger of failed breakouts.

The last price I saw on QQQ in the after-hours session was 38.83 so its July trendlines will likely be tested right at the open tomorrow.

It's a similar story in the Nasdaq...

Ditto for the S&P with the additional threat of a failed breakout above the June highs.

Worden pointed out the possibility of a broadening top (aka megaphone) formation on the Dow. A very similar pattern exists on the S&P chart too.

Here are some of the big cap stocks (MSFT, AMZN and AXP) that disappointed in tonight's earnings reports. As you can see, serious damage will be done to their technicals tomorrow if they open where they ended the extended hours session.

The other day I said that I wouldn't be surprised to see the Nasdaq fill last Wednesday's gap. It's now a long way from that but Microsoft has a good chance of doing just that tomorrow.

No changes

The melt-up continued melting up today with more than 1% gains across the major indices. Today showed that there are some very motivated buyers out there. The indices tried several times to close the opening gaps but buyers kept stepping in. Earnings season really kicks in this week so the market's extended short-term posture should get a good test. Absent some bad news there's no reason for a flood of selling right now.

No changes

So the bulls barely gave up any ground to end the week and that leaves the indices very extended. I think that it's going to take some great earnings releases to drive the market much higher without at least a few days of sideways movement. The Nasdaq actually punched out a new 2009 high last week but it did so on below average volume. That makes me the move suspect in my mind. If we start to get some big names reporting weak earnings I wouldn't be surprised to see the Nasdaq fill Wednesday's gap.

It's a similar story for the S&P 500 except that it hasn't made a new high for the year. It's perched right below resistance from its 2009 high. The short-term stochastic is very overbought, which isn't surprising after a 7% move in four days. I'd like to see stochastic cool off before thinking about putting new money to work.

I was mildly amused by Friday's Worden report, especially the part about the "true" author of Technical Analysis of Stock Trends. I envision him being the Little Richard of technical analysis had he lived to see the popularity of later works...

Having shattered a perfectly good head&shoulders top, demonstrating an obvious zeal in the process, the market is now once again showing signs of confusion and trepidation. Now what is it supposed to do? The sky is one big resistance zone.

My email reveals what appears to be a fairly wide lack of understanding of H&S tops, despite the fact it is probably the most widely recognized picture pattern on a chart. It probably is that, since it is so recognizable, it has become the most famous picture pattern used by technicians. Considering the American propensity to admire the rich and famous, the H&S stands out as a celebrity of sorts. The pattern presents such a clear picture--a lineup of a left shoulder, then a head, then a right shoulder.

None of the other picture patterns are as unambiguous. However, the artistic merit of an H&S should not be construed as the key to its accuracy as a forecasting tool. It is a good tool, but most picture patterns are just as good. You'll never find one that is perfect or that will do your thinking for you, whether it be a rising wedge, an ascending triangle, a double top or a W bottom. Try doing some Google searches on specific patterns. You may be surprised at the amount of free information you can pick up on the Internet.

These are patterns that technicians have been spotting for decades. All the famous ones are described in what is sometimes referred to as "the bible of technical analysis:" Technical Analysis of Stock Trends is the name of the book. I won't mention the authors' names, since the real author of the important parts of the book was named Richard Schabacker. They didn't even include his name among the supposed authors. Schabacker, who died quite young, was the master chartist. His charting section has been published under another name: Technical Analysis and Stock Market Profits. The Real Bible of Technical Analysis.  It's available from Amazon. I believe every technician should have a copy of this book.

Now that the H&S has been dissipated, a new picture pattern may develop. I see possible early signs of what is called "a Broadening Top." It is sometimes called a Megaphone Pattern, because it is in the shape of a megaphone with higher highs AND lower lows as the pattern progresses from left to right. It is a bearish pattern. There are other possibilities, some bullish.

As it stands, I think the short-term uptrend has moved up impetuously and may require some kind of a setback to regain its confidence. That is, if it is intent on moving up. There are quite a few important earnings reports that will come out soon. They will have an effect--especially now that almost nobody knows how to evaluate the market based on anything that hasn't actually happened.

No changes

If you've been watching CNBC this week you may have seen Art Cashin lay out his "super rally" scenario. It's essentially a massive short-squeeze caused by those bears who bit on the S&P's break of the neckline of the head & shoulders pattern (H&S) many people had been watching. Of course that breakdown turned out to be a head-fake. So Art theorizes that as the S&P takes out the right shoulder and then the head of the H&S those bears will scramble to cover their positions and push the market even higher. Judging by the intraday action (no dips/melting up) on Monday and yesterday I think there's a lot of short-covering going on. Heck, I'd just call it panic buying, which is probably also being done by people who are not short but are fearful of missing out on any upside.

I've always preferred to see the market weak ahead of earnings because it felt as though it was easier to spark a rally since expectations were apparently lowered. We were in that situation to start this week but now we're in the opposite situation. The indices are short-term overbought and heading into resistance from the 2009 highs. It may be tempting to try to chase stocks here but I believe there will be some earnings disappointments in the coming weeks that will create better buying opportunities.

Everything is up once again...

I was beginning to wonder if the bounce scenario I laid out in the last recap was going to come to pass. The market was acting very heavy the last three sessions and it seemed that the market would work off its oversold condition by going sideways. I'm not sure if it was the bullish analyst talk about GS and other financials or just hopeful bulls rushing in ahead of earnings that caused today's rally. I suspect it was the latter given the broad advance -- all sectors were up today except for hospitals and transport which were down slightly.

The Nasdaq continues to look the best of the major indices. It was able to recover from early selling and climb back over its 50-day moving average.

The technical pictures for the S&P 500 and Russell 2000 are very similar. Both are in well defined downward-sloping channels. But before they can attempt to break free of those channels they will need to conquer their 50-day moving averages.

A lot of upgrades today but the "ups" for the S&P and Russell are very solid yet IMHO. I'll feel better about them once (if) they break out of their downward sloping trend channels.

This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.

The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.

Here's the Nasdaq chart:

OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.

FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.

No changes

The S&P 500 held above its 200-day moving average for most of the day but it gave in to the selling pressure late in the day. It's now set to retest the support/resistance zone around 875. That was resistance in late January, early February as well as April before flipping to support in May. There's not a lot of obvious support below that zone so a breakdown would be a big deal in my eyes.

Things don't look nearly as bad over in Nasdaq land. That index broke its 50-day moving average today but it's still well above its 200-day and its May lows. That could change quickly though, especially if the S&P breaks that 875 zone and people start looking for stocks to sell (short) with a lot of air under them.

More damage done today...

The market recovered from an early attempt to extend Thursday's selloff to end the day decidedly mixed. The Dow and S&P 500 were able to close in positive territory while many other indices, including the Nasdaq, Russell 2000 and the S&P 400 (midcaps) ended the day in the red. That kind of action smacks of a confused market. I'm also seeing indecision in many of the stocks that popped up in my scans tonight. There were many potential bullish reversal candlesticks (doji and hammer-like candles as well as NR7s) made today but very few of them screamed "buy" to me. I always like to assess those candlesticks with respect to the prevailing trend and for most of what I saw tonight were sideways at best. This is a tricky spot though, I think 900 on the S&P 500 could be solid resistance but there's also nearby support at 886 (200 DMA).

The trend table is looking a lot worse since Thursday's big drop...