Corey Rosenbloom, CMT, submits: “The market that has suffered most is that of the US Dollar (Index).  The Dollar Index began 1999 at the $95 Index level, rose prominently until its mid-2001 peak above $120… and fell all through the decade with the exception of 2005 and late 2008.  Price remains in a primary downtrend.

While the chart may look terrifying, in percentage terms, the Index is ‘only’ down 25% from where it began 1999 at $95, and is down 40% from its 2001 peak near $120.

Use this post and these charts as a reference for the 1999 – 2009 period when looking at how major markets have performed over the last decade.” (Source: Afraid to Trade)

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Our partners FusionIQ state: “First Busey Corporation (BUSE) a multi-bank holding company that provides commercial, retail, and correspondent banking, as well as trust services, insurance service in Illinois scored a new FusionIQ Sell signal and broke down on above average volume. With the banks leading the move down BUSE shares may offer a nice short term short opportunity to play the market weakness profitably.” To learn how you can get an edge trading/investing with FusionIQ’s powerful platform, click here to watch my product review and take advantage of our special Wall St. Cheat Sheet 20% discount.

Corey Rosenbloom, the Technical Analysis Professor, has a hawk’s eye on Goldman Sachs (GS): “Goldman Sachs’ daily chart to note the overhead EMA resistance that is bearing down to form a potential Bearish Cradle Sell Signal.” (Source: Afraid to Trade)

Precision Capital Management submits: “We’re updating a SPY chart we posted here before, which shows VWAP anchored from various dates, including the October 2007 high, the March 2009 low, and some interim points in the rally.  This Monday featured a successful test of VWAP anchored from the July 2009 breakout and yesterday broke above VWAP anchored from the October 2009 high.  It looks like SPY wants to test long term VWAP anchored from the October 2007 high again.  If it can successfully break above to new highs, there’s likely a long way to go in this rally.  If it fails, we’ll probably see a more prolonged correction.  For an explanation of anchored VWAP and other parts of the Paul Levine MIDAS Method (along with a free TradeStation indicator), visit our website.”

David Singer takes a look at the IYR real estate ETF as correlated to the SP 500 (SPX): “Likely due to the crash in real estate prices, which had preceded the precipitous decline in equity markets, the IYR was underperforming the S&P 500 into the summer of 2008. As fall rolled around, the IYR joined the S&P 500 and pretty much all equities and commodities in a waterfall decline. Since that time however, the IYR and S&P 500 have traveled in lock step with each other. Moreover, the head and shoulders bottom pattern in the IYR is slightly clearer that the one in the S&P 500 and in my opinion validates the existence of a true head and shoulders bottom in the S&P 500 that yields a price target of 1230. Both are on the verge of breaking through trend line support, but have yet to do so.” (Source: Singer$Market)StocksFinancialGSBUSEIYRSPYSPX

Our partners FusionIQ state: “TiVo Inc. (TIVO) whose service allows viewers to locate and record multiple shows, control live television, choose viewing preferences, and access their customized lineup of shows scored a new high volume, breakout. This breakout comes one day after TIVO scored a new FusionIQ timing BUY signal. With an unbiased point and figure target of $ 16.50 and a 100 FusionIQ technical ranking, TIVO shares look to have solid upside potential if purchased on pullbacks. Fundamentally an imminent settlement with Dish Network (DISH) is an added catalyst that is likely to drive shares.” To learn how you can get an edge trading/investing with FusionIQ’s powerful platform, click here to watch my product review and take advantage of our special Wall St. Cheat Sheet 20% discount.

Dr. Brett Steenbarger, author of The Daily Trading Coach, teaches us some signs of a Downtrending Day:

* Inability to take out overnight highs on economic news;

* Break below the opening price range (blue line);

* NYSE TICK consistently negative;

* Intermarket themes show strong dollar, weak commodities;

* S&P 500 sectors consistently down from their opening prices;

* S&P 500 Index trading consistently below its volume-weighted average price;

* Volume in ES futures consistently hitting bids over lifting offers;

* Price consolidations at successively lower prices (blue arrows above). (Source: TraderFeed)

Corey Rosenbloom, the Technical Analysis Professor, submits: Let’s take a look at the full S&P 500 rally from the March 2009 lows and take a special look at daily readings of Breadth and Comparative Volume to see that Internals surged higher and confirmed the initial rally but lately in an ‘about-face,’ have been failing to confirm the new 2009 price highs.  Let’s take an objective look at price and underlying internals. (Source: Afraid to Trade)

Precision Capital Management offers a very cool chart this week as a follow up to our Market Profile column with Tom Alexander: The S&P 500 has recently been up against its most formidable resistance since the start of the 2009 rally.  Pictured above is SPY with volume at price (red) beginning at the October 2009 high.  The green horizontal line marks halfway between the two greatest points of control, which roughly coincide with VWAP, also anchored from the October 2009 high.  The bulls and bears continue to battle it out here as a failure could see price trade down to lower anchored VWAP support at 101.96 or 91.96, and a breakthrough could see price reach the higher point of control at 127.90.  We update our readers daily on these and other market developments (free registration here), but will be paying particular attention to this chart. (Source: Precision Capital Management)

Want our Feature Trade and more charts with trading recommendations? Click here to get a free copy of our October Premium Newsletter.

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JEF

Our partners FusionIQ state: “Jeffries (NYSE: JEF) may be the next brokerage firm to struggle.  After scoring a major top (orange dotted semi-circle) shares then broke what had been longstanding support (double red lines).  Once broken this support became a big resistance zone which shares then subsequently failed at on its recent snap back rally.  Of a more critical note is the fact that JEF shares are tesitng a longer term trend line (green line) for the third time in a relatively short period of time.  The high frequency of trend line tests in such a short period of time suggest that a likely trend break is coming soon.  A close below $ 14.00 would be a crucial breakdown and suggest a move to the $ 10.00 to $ 9.00 region.
Raising the odds we are right here is the fact that JEF shares have a low FusionIQ Master Rank Score of just 41 (out of a possible 100).” To learn how you can get an edge trading/investing with FusionIQ’s powerful platform, click here to watch my product review and take advantage of our special Wall St. Cheat Sheet 20% discount.

ERX

Precision Capital Management submits some more technical analysis candy: “We have posted Anchored VWAP charts here before, but that is only a part of Paul Levine’s MIDAS Method.  The other part is the Topfinder/Bottomfinder (TBF) curve.  When price pulls away from VWAP, a TBF curve is fitted to the first pullback.  Because of the symmetrical relationship between the accumulation and distribution volume of a strong trend, the TBF curve will often predict when the fuel of a rally is consumed.  Above shows a recent TBF curve for Energy Bull 3x ETF (NYSE: ERX), which began October 5 and ended October 21, 2009, which amply demonstrates what happens when the fuel runs dry.  We are doing some exciting research to take MIDAS a step further and will regularly update our readers (free registration).  Also, we encourage you to visit the new website of MIDAS experts David Hawkins and Andrew Coles, who recently wrote a three part series of articles in Technical Analysis of Stocks & Commodities, and who are doing some exciting new research of their own.” (Source: Precision Capital Management)

Corey Rosenbloom, the Technical Analysis Professor, submits: Wynn Resorts (Nasdaq: WYNN) has come into a “Make or Break” support zone at the $60 per share level.  Let’s take a look at its daily chart and note Fibonacci, Moving Average, and Bollinger Band support coming together just beneath price right now. (Source: Afraid to Trade)

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Our chart of the week comes from our partners at FusionIQ: “Gold Fields Limited (GFI) which produces precious metals and has mines in South Africa, Ghana, and Australia, as well as a partnership in Finland scored a bullish upward price gap yesterday. With an 86/100 FusionIQ technical score and a solid chart patter GFI shares look like they can continue to rise.” To learn how you can get an edge trading/investing with FusionIQ’s powerful platform, click here to watch my product review and take advantage of our special Wall St. Cheat Sheet 20% discount.

Corey Rosenbloom, the Professor of Technical Analysis, asks a great contrarian question: “Four times over the last four months, price looked like it was going to begin a deep retracement … and then suddenly and sharply began rising, taking all short-sellers’ stop losses with them.  Is history about to repeat itself again?” (Source: Afraid to Trade)

Precision Capital Management takes a look at the Gold breakout in multiple currencies: “Above is an update of a previous chart we did for Chart Junkie after the September 3 2009 breakout in gold.  We got the early confirmation of the breakout when gold priced in Canadian Dollars (CAD) and Australian Dollars (AUD) consolidated and never broke support.  This week, gold finally made a breakout move above the September high in the Euro, Yen, and CAD.  Only the AUD still needs to breakout, but we are not surprised it has not based on their short term interest rate strength.” (Source: Precision Capital Management)

Trader Mark is taking some Blackstone Group (BX) off the table. Notice how he’s managing risk as we approach previous resistance. (Source: Fund my Mutual Fund)

The USA Today has a nice graphic on how long people think it will take to recover their losses from the great market scam of the century. (Source: USA Today)

Want more charts with trade ideas and our recommended trade? Our October Premium Newsletter is hot off the press! Click here to get your FREE copy now.

This is a guest post by The Professor Corey Rosenbloom.

For those of you who missed it, AIG had a large breakout from a short-term symmetrical triangle which led to a sudden achieving of the ‘measuring objective’ or price projection target.  Let’s take a look at this triangle, as it serves as a great example of the “price consolidation and expansion” principle, as well as a near perfect ascending triangle trade set-up.

This chart shows the internal (30-min chart) for all of September so far.  If we looked further to the past, we would have seen a huge surge to the upside, and this is the consolidation period/phase after the upward impulse.

Keep in mind that AIG has risen from $12.50 in early August to $54 presently in September – that’s astonishing.  However, this post is focused mainly on recognizing and trading the triangle as seen above.

The ideal symmetrical triangle will form an obvious contraction in price range – which often is signaled by drawing two converging trendlines off price swing highs.  During this time, volume contracts as the triangle forms and price compresses further – reaching a “Value Area” (to use a Market Profile term).

This means that buyers and sellers are in ‘balance’ and are ‘comfortable’ with the established price (around $40 per share).  However, as we know, balance and perfection cannot hold in the stock market, so the smallest thrust (or impulse) out of the ‘value area’ can cause shorts to cover quickly, and simultaneously draw in new buyers, excited about higher prices… which causes more shorts to cover quickly.

As such, you get a one-sided (”positive feedback”) market as a virtuous circle (or vicious circle… depending on which side of the market you are on!) develops.

Without getting too deep into market pricing theory, let’s just say you want to be a buyer as the upper trendline is breached to play for the expected (though never guaranteed) price breakout move.  The move could have just as easily came to the downside, so it’s often best to wait until the market tips its hand before putting a position on.  A stop would go on the opposing side of the trendline.

The target is just a classical “triangle” target, which is to take the ‘height’ (or distance between the two highest points of the triangle) and add that to the breakout price (at $42).

The height in this case was about $10, so that gives us a target of $42 + $10 = $52… which price hit and exceeded today on the morning gap.  This would be your exit on the trade.  Markets have a tendency to find resistance (or support) at price pattern projections, as seen here so far.

Continue studying this pattern for additional insights that will help you the next time a similar triangle forms in your favorite stock or market.

Corey Rosenbloom, CMT Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

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Looking for more from the Trading Professor? Try this:

The Technical Analysis Professor Shows Us How to Use Internals

Annotated US Dollar (Click for Readable Image)

My new friend David Singer has been doing some incredibly clever annotations to charts. This week he takes a look at the US Dollar and says:

1) Obviously its purchasing power has rapidly declined, hence why we have to work harder to get less, i.e. two income families etc.

2) Support is still at 70, which has yet to be broken…

3) the pattern taking shape now seems to be mirroring the pattern from 1987 to 1995…

4) If thats so we should continue to move in a range and them eventually higher…

5) after 1995, the equity markets took off, but, so did the USD … I think the reason is the fiscal situation. That why the USD and equities are moving in oppsite direction snow, whereas then the moved in tandem.

(Source: The Big Picture & Singer’s Market)

The Technical Analysis Professor Corey Rosenbloom has some great charts comparing historical crash recoveries. Above is our current experience as it has unfolded thus far. (Source: Afraid to Trade)

This week, Precision Capital Management says: “Above, we present Anchored VWAP (volume weighted average price) once again, but this time for SPY.  The thick blue line represents the average price paid since the anchor date of October 11, 2007 (the all time high in SPY).  Also plotted are Anchored VWAP from the March 6, 2009 low and July 8, 2009 interim low.  The other colored lines represent standard deviations of the respective VWAP lines.  Thursday’s knock-your-socks-off rally came just shy of the October 2009 VWAP line.  This means SPY has reached an equilibrium point for the entire down leg, and we can expect some oscillation around this area before the markets decide what to do next (not unlike what we would see at a 200 day moving average).  Also notable is the 2nd standard deviation lines (yellow) of the other VWAP lines, that have formed a confluence resistance area around current highs.  Indeed, the 2nd standard deviation of VWAP from the March 6, 2009 low (hellow) has contained the entire rally, thus far.  Should SPY trade above the October 2007 VWAP line, we could easily see a blow off top that trades up to the 3rd standard deviation of the March 2009 VWAP line (red), currently at 115.70.  Otherwise, if the current area is rejected, we would expect SPY to trade down to at least the July 2009 VWAP line, currently at 99.82.  Visit our website for more information about Anchored VWAP and for a free download of the TradeStation Anchored VWAP indicator we use.”

Frank DeRose asserts: As the number of foreclosures continue to mount, vast swaths of American cities are becoming deserted. In some places, more than a quarter of available rentals sit empty, while other systems have largely resisted the trend. Our latest Transparency is a look at the 10 most vacant and most occupied metropolitan areas for both houses and rental apartments.
(Source: Good Magazine)

Earlier this afternoon, I posted a standard “Mid-Day Check of Market Internals” which suggested that market internals were giving an edge to the upside (for higher prices yet to come).  Let’s take a look at the end of day internals to see how the Breadth and Volume Internals – along with the TICK – tracked price all day in the SPY.

Here we see the standard SPY (S&P 500 ETF) chart overlaid with the NYSE TICK.  Beneath that is “Breadth” (Net NYSE Advancers in Green with Decliners in Red) and then in the lowest panel, we have the Up Volume (Green) compared with Down Volume (Red).

How did Internals measure up during today’s staggered up trend day?

The TICK stayed concentrated in the upper range (above zero) which created a positive distribution of TICK readings – which was inherently bullish (higher TICK highs than lower TICK lows) which served as a confirmation of higher prices.

Also, new intraday TICK highs – like a momentum oscillator – hinted that higher prices were yet to come (bullish “signs of strength”).

Breadth was positive in the morning, faded negative just after the open, then broke away (first highlight bar) just before 10:00am CST on the initial rally off the morning test of the lows.

As I mentioned in the afternoon post, Breadth was unabashed bullish, with the number of Advancers outpacing the number of Decliners – this tendency held up all day long which served as more confirmation of higher prices.

Finally, the UP/DOWN volume indicator was mixed to choppy until it cleanly broke apart just after noon CST (during the “Afternoon Breakout” Period).  This is intended to tell us whether volume is flowing into advancing/up issues or declining/down issues – it is read as a differential just like breadth.

Price structure itself confirmed an upward move – with higher highs and lower lows forming, and price remaining above the 20 and 50 period EMAs, and those EMAs being in the most ‘bullish orientation’ possible.

Market Internals and “Structure” help establish and confirm “biases” (not the bad kind) in terms of what to expect for the next period ahead.  We want to know if price moves (in this case, up) were being confirmed or not confirmed by market internals… or if the internals showed a mixed picture.

Take a moment to study additional insights from today’s trading day for help when this structure repeats in the future.

Corey Rosenbloom, CMT
Afraid to Trade.com

Click here to follow Corey on Twitter.

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Consumer Credit

This first chart from Michael Panzner shows a very disturbing truth for bulls who are holding their breath. (Source: The Big Picture)

SPY

The Professor of Technical Analysis, Corey Rosenbloom, shows us that bulls are buying the dips and bears are getting ripped. (Source: Afraid to Trade)

ES Pivots

Precision Capital Management takes a step back and looks at how the S&P Futures are trading relative to their pivots: “A relatively simple way to calculate support and resistance is with a formula that floor traders have used for years and used to do by hand.  They would take the average of yesterday’s high, low and close to come up with the pivot point (PP).  Then they would calculate up to 3 levels of support (S1, S2 and S3) and resistance (R1, R2 and R3) using a simple formula.  Many traders use these levels not only on the previous day’s prices, but also on weekly, monthly, quarterly, semester and yearly time frames.  Intraday traders often look to the 60 minute pivot to guage strength of the market (above or below the 60 minute pivot) and to set price targets.  When several levels line up in confluence, they can serve as powerful support or resistance.  In the above chart, to the right we have a daily chart of the eMini S&P 500 that shows the weekly, monthly, quarterly, semester and yearly pivots, with each higher level being more thick than the last.  The yearly pivot served as powerful resistance in late August 2009, but price has recently broken through.  On the left is a 5 minute chart with the same levels as the daily chart, but also with the daily and intraday pivot levels plotted.  As of this morning (September 11, 2009), price has hit confluence resistance (composed of monthly R1, weekly R2 and daily R1) and backed off a bit.  Being able to keep track of all these levels on a single chart can give a significant edge to a trader, which is why we are offering this powerful, proprietary TradeStation pivot indicator for free on our website here.”

Monsanto

Trader Mark reminds us that expectations are high and to miss them is to hit the down button on the elevator. (Source: Fund My Mutual Fund)

ULTA

Our partners at FusionIQ offer this Chart of the Week: “Ulta Salon, Cosmetics & Fragrance (ULTA) a beauty retailer that provides prestige, mass, and salon products and services in the United States saw its second-quarter net income rise 56%, easily beating Wall Street analyst expectations. The beauty retailer posted a profit of $5.8 million, or 10 cents a share, compared with $3.7 million, or 6 cents a share, during the same period a year ago. Revenues for the period came to $273.5 million, a 10% increase over the same period last year. With a volume surge that was 10 times greater than the average volume over the last six months and a new FusionIQ BUY signal and a $ 22.00 target we believe ULTA offers an attaractive entry on pullbacks.” If you love charts but wish the trading signals were given to you by pros, click here to register now for a special Wall St. Cheat Sheet 20% discount to get your investing edge with FusionIQ’s powerful platform.

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