by Paul Costa

Below are bullish stock chart patterns that are anticipating further bullish moves for these stocks.

FIO

Pattern:  Hammer Candle stick pattern
Target: 15.50 and above
Notes:   Today’s candle is very strong and shows a reversal after making an all time low but rebounding enough to close above the previous all time low at 14.90.   With a high short float and a bullish candle this stock has the potential to move higher.  Looking for a break above 15.50 to confirm as a break of resistance is even more bullish.

by Paul Costa

Apple’s Chart  ticker AAPL  has once again found support at 419.68 which is a much stronger support level on a weekly time frame.  

On Friday Apple hit this level again and bounced to form a Hammer Candle which is bullish when it comes after a downtrend.  This is exactly what happen on Friday with AAPL, the bears controlled the day till it reached 419.68 which the bulls regain controlled moving the stock near its opening price forming a hammer candle.  This typically indicates a bullish reversal of the downtrend, so it is possible to see Apple climb higher.  

It still has to get above 428.28 ad then 437.36.   If it can get above this level AAPL could move back up towards 469.  But watch out cause if it fails at the 437 level we are looking at a right shoulder forming on this stock, with a potential head and shoulders pattern forming.

by Paul Costa

Below is the DO (Diamond Offshore) Chart which is showing a bearish chart pattern.

DO: Diamond Offshore
Pattern: Descending Triangle Pattern
Triangle Size=78.06-67.08= 3.78
Price Target = 63.30
Stop: Above 67.08
Void Pattern: 68.59

by Paul Costa

DOW THEORY

A theory which says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high, it is accompanied or followed by a similar advance in the other.The theory also says that when both averages dip below previous important lows, it’s regarded as an indicator of a downward trend. INVESTOPEDIA

The Dow Theory is something that people subscribe to in the market, it is the belief that the market will rally as long as transports or industrials are rallying since these are big parts of the economy.  As of now this theory is not confirming this latest rally and in fact based on the definition above its very possible it can confirm a downward trend. IYT (Transports) and XLI (Industrial) are near key support levels and if they go lower have the potential based on the theory to indicate a downward trend.  In fact they both made a new swing low yesterday while the market was making highs.  But both remain above key support and there is the potential for these sectors to bounce and join the overall rally but the fact that these two sectors are not rallying is something to be aware of especially if they continue to move lower.

by Paul Costa

On Wednesday we looked at MS at it’s descending triangle pattern.  Now its time to look at XLF which represents the entire sector.  It too has formed a descending triangle pattern with the potential to break lower.    What is interesting is that unlike the market XLF has not been making new highs and trending lower– typically a warning sign for the market.

Pattern:   Descending Triangle
Breakdown Level: 18.06 with 18.03 as a confirmation level
Price Target: 17.60 – 2% move
Voided Patter:  Break above trendline and 18.30
Stop-Loss:  If breakdown occurs Stop-loss is above 18.06

Source: Piker Trader

by Paul Costa

Internals are the breadth of the market and breadth is what is truly going on in the market.  

It represents the vital signs and it is  based on all stocks and treats them all equally it cannot be manipulated.   Since the last rally off the February lows the market has been rallying yet internals have been diverging in a negative way from this.  This doesn’t mean the breadth of the market has been bearish or weak, it means that the market is making new highs in price without breadth.    But this should be a warning since any T.A trader wants to see breadth also following the market to new highs.

NYMO:  Has been in negatively diverging from the market since December of last year but the most important levels divergence is from the high in March to now.  NYMO has barely got above 10 and spent most of the time down below the zero line.

NYSI: Which is a longer-term indicator is showing more divergence in the market.  

You can see how NYSI was moving along with the market till lat January when it started to decline which precipitated the early March decline and since then NYSI has not been able to get back to those levels and now as the market has rallied to new highs NYSI continues to decline.

Overal the market can still trend up with weaken internals, but it won’t last forever and the weaker the internals the less support is has when the market does fall. If these new highs were legit new highs and signs of greater new highs breadth would be following.  Beweary of the negative divergence in the internals especially since we are heading into the bearish summer season which seems like a good time for a correction.

Source: Piker Trader

by Paul Costa

With the market rallying high and breaking out of its triangle. There are still a few stocks that will enjoy this rally and as we move towards the final push. Below are a few stocks with bullish chart patterns and a high short float making them nice set ups for a squeeze and to enjoy the a rally. The charts are live so you can follow the breakout or continue to check back to see if they are breaking out.

Symbol: GME

Breakout Level: 25.86
Stop-loss: 25.08
Price Target:  P1= 26.58 P2 = 27.04
Notes  Short float above 20%

Symbol: HLF

Breakout Level: N/A Stock is bouncing off support forming a rounded bottom  
Stop-loss: below 37
Price Target:  P1= 40.60 P2 = 44.68
Notes Stock is bouncing off support and volume is picking up. Stock has a Short float above 20%

Symbol: BZH

Breakout Level: 17.03 stock has formed a tight range between 16.52 to 17.03
Stop-loss: below 16.50
Price Target:  P1= 17.75 P2 = 18.46
Notes Bouncing off the bottom of its range, stock continues to make new highs after bouncing off bottom of the range. Watching for breakout. Stock has a high short float and low amount of shares float setting up for a good squeeze

Source: Piker Trader

by Paul Costa

Bullish Triangles Have Formed:

What the market has done over the last week has formed a triangle pattern/pennant pattern (the pennant is practically the same as the triangle).  The last time it formed a pennant/triangle was end of February before the market broke out to new highs.    Once again the market formed a a pennant/triangle and is nearing its breakout level of this pattern.

Bearish Triangles Are Forming:

But  there is another triangle that is also forming and that is a bearish triangle. The market has trending downwards since its high  3/14.  This downtrend has formed one side of a descending triangle.  The bottom of this triangle has already formed when the market bounced on 3/5 and 3/19.  Check below for greater detail on these levels for SPY and QQQ.

How to Trade SPY’s Triangles:

• Pennant: If SPY was to breakout of its bullish pennant/triangle pattern and more importantly get above 155.67 a key resistance level then the measured move of this pattern would put move SPY another 2% higher and above the 2007 high.    But a realistic target if there is a breakout is the high from 2007 at  157.52.  If the Pennant breaks to the downside and breaks 154.20 it would set the market up to play the bearish descending triangle.
• Descending Triangle: If the market choses to to play the descending triangle pattern it should fail at the 155.67 level, or break below its pennant at 154.20.    The bottom of the triangle is at 155.39, which was the breakout level from 3/5 and the swing low on 3/19.  A true confirmation of a move lower would be a break of 152.90 aka the unfilled gap from the breakout on 3/5.  A measured move of this pattern would put SPY at 150.23
  • SPY > 155.67 Bullish
  • SPY > 156.11 Very Bullish
  • SPY < 154.20 Bearish
  • SPY < 153.29 Very Bearish 

How to Play QQQ’s Triangle:

•  Pennat: Playing the QQQ triangle is slightly different then SPY, the breakout is still the same.  If the Q’s breakout above 68.75 its a break of the triangle and a confirmation would be a break above 69.01 with another 2% measured move.  A bearish breakdown of the triangle is at 68.09 which sets the Q’s up to play the descending triangle.
• Descending Triangle: The descending triangle pattern is slightly different then SPY’s.  The short-term downtrend has from the 69.01 high has formed the top of the triangle, but the bottom of the triangle is the where the breakout on 3/5 occurred.  The Q’s have already filled their gap from the breakout and this area of 67.78 has been support over the last few days.  This is the bottom of the triangle, a break of this and the pattern sends the Q’s back towards 66.48.
  • QQQ > 68.75 Bullish
  • QQQ > 69.02 Very Bullish
  • QQQ < 68.09 Bearish 
  • QQQ < 67.69 Very Bearish 

The odds slightly favor the breakout of the bullish triangle here and we won’t have to wait long for it to happen since SPY is right a the apex.  The basic theory for the breakout here is that based on SPY’s 7 up days in a row and 10 days in a row for the Dow market and what happens after a 1.5%- 2% dip.  Just looking for about another 2-3% move before the market officially tops.  But the good thing about identifying both patterns is that if SPY or QQQ break down of their pennant, we have a game plan to profit from the drop.

Source: Piker Trader

by Paul Costa

Gold  Miners stocks are looking to make a move as the have consolidated over the last few days and are now nearing the apex of the ascending triangle pattern or triangle pattern that have formed.  

Over the last few days GDX the miners ETF and other gold mining stocks have formed similar patterns and as they near their apex of the triangles they appear ready to breakout or breakdown.  A break above they go higher a break below they go lower.

GDX (Live Chart)
Pattern: Ascending Triangle
Breakout Level: 38.20
Stop-Loss Level: 37.20
Price Target:  Measured move of the Triangle 38.20-35.57 = 40.83

AEM (Live Chart)
Pattern: Ascending Triangle
Breakout Level: 40.81
Stop-Loss Level: 39.84 or below the breakout level when there is a breakout
Price Target:  42.24 then if it get get above that 43.68

KGC
Pattern: Ascending Triangle
Breakout Level: 8.13
Stop-Loss Level: 7.86
Price Target:  8.44 but if it can get above that 9.25

NUGT (Miners Triple Etf)
Pattern: Ascending Triangle
Breakout Level: 5.80
Stop-Loss Level: 5.36 or below 5.80 if there is a breakout
Price Target:  7.20 to 7.55

GOLD (Live Chart)
Pattern: Ascending Triangle
Breakout Level: 84.40
Stop-Loss Level: 82.63 or below the breakout level when there is a breakout
Price Target:  89.27 and 92

Source: Piker Trader

by Paul Costa

QQQ made an interesting move yesterday as it was the only sector to close its gap from the break out in early March, all other indexes came close but did not close the gap.  QQQ also confirmed the 67.68 support level as the Q’s bounced off this level and closing above the new formed resistance at 68.08.  Yesterday’s action shows strength by the bulls and signals a retest of the highs with a stronger potential for a breakout.   The next resistance level that the QQQ should break through is 68.40 which was the bottom of range while SPY was testing the highs at 69.02.  The 69.02 level is the line in the sand for a larger rally for tech, a break of this level and QQQ can begin to test the highs from the fall at 70.58.   This breakout could occur as we are seeing strength in AAPL after it bounced off long-term support as well.

Source: Piker Trader