Higher Prices in Store for Crude Oil?

The last three day’s candle pattern on WTIC Crude Oil could very end up being a “Three White Soldiers” pattern, which is, technically, bullish [Definition (courtesy of StockCharts.com): “Three White Soldiers: A bullish reversal pattern consisting of three consecutive white bodies, each with a higher close. Each should open within the previous body and the […]
Slope of Hope

Charting China with FXI – The Boom and Bust

We’ve seen so many headlines recently about China, its economy, and how it pulled down the stock market last week.

Let’s step back and chart China with the ETF symbol FXI to see what’s happened and what’s important now.

2015 has been a volatile year for the Chinese stock market, as seen with the tradable ETF FXI.

First, the fund had a strong bullish gap and breakout – on higher volume – going into April.

Price surged from the $ 43.00 level straight up toward $ 52.00 which was – so far – the high of the year.

At that point, price retraced lower, then later broke the support of the 50 day EMA into the $ 48.00 zone.

From there, the selling intensified on very high volume – up to 100 million shares in a day – in July.

That was the first “crash” or collapse of the ETF from $ 50.00 to $ 39.00 in about a week.

From there, price stabilized at the $ 40.00 level before crashing again, this time on lower volume in August.

This “August Crash” is credited for sending the US Stock Market rapidly lower.I also highlighted what happened during the July ‘crash’ which is happening again during this August move.

Shares bounce strongly higher back into the underside of the falling 20 day EMA.

Let’s actually broaden our perspective to the Weekly Chart to pinpoint the key levels at play now:

Going back in time, we see the FXI fund created a triple support shelf at the $ 32.00 per share level.

Resistance was less defined, as it stretched from $ 40.00 to $ 42.00 per share.

Finally, the fund broke strongly higher in early 2015, overheating above $ 52.00 per share.

The result was just a “Return to Earth” from a Rocket Arc Pattern – a V-Spike Reversal at the highs.

Speaking of the Rocket Arc, be sure to review my post from China’s FXI Rocket Arc as it occurred.

Price collapsed down from $ 52.00 toward the $ 32.00 key support pivot which is where we trade now.

Note the higher frame reference levels, the multi-year balance range ($ 32.00 to $ 42.00) and the current movement up off the $ 32.00 level.

If shares fail to bounce and suddenly break under $ 32.00, it would indeed shift the chart and expectations toward even more selling pressure under $ 32.00.

Afraid to Trade Premium Content and Membership

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

Market Recap Aug 31, 2015

As we exited last week we said the easy bounce that was predictable based on rarely seen oversold conditions was now in the rear view mirror and now it gets complicated. The nature of the action in the next 4-10 days will tell us a lot about the intermediate term. Today was not such a good day to that end. The S&P 500 fell 0.84% and the NASDAQ 1.07%. We had a very atypical month for…

Read the full article at StockTradingToGo.com


Stock Trading To Go

Is JC Penney breaking out?

Written By: DragonFly Capital

<> on February 28, 2013 in Daly City, California.

The stock market has been a volatile place the last week or so. After a period of 6 months of the lowest volatility ever that may not come as a surprise. Unleashing the powder keg. A new week and a settled market (for a day at least)leaves some time to peruse for stocks that have had goo relative strength. One of those is JC Penney ($ JCP). It did pullback with the market but is now back higher and close to making a new 10 month high. Is it time to buy it?

The chart below shows the price action from last week. A drop to the March support and a rapid rise back higher. Whoever caught that bottom at 7.21 six days ago is very happy up 27%. But what about the rest of us? Is it finally time to buy? There is a case to be made for both the buy side and the sell side.

jcp

First the buy side. I have already mentioned the relative strength compared to the rest of the market. But there is more. The RSI is bullish and climbing and the MACD turning up. These support more upside. The Bollinger Bands® are opening as well to let it rise. A break f the channel has very little recent price history between 9.40 and 11.

But the stall at the channel top is one reason it may not be ready. The possible Evening Star is a reversal pattern if confirmed lower Tuesday. That may give a trade back to the mid line of the channel. Another is that the price is outside of those opening Bollinger Bands.

The best thing to do with a chart like this (and there are many at resistance after the moves back higher last week) is to watch how it reacts to resistance. On a break to the upside it can be bought. A rejection lower is a short sale. This illustrates one of the key principles of technical analysis. It helps with risk management to define points of reflection.

Get my ebook, Markets for 2015 and Beyond, a long term forecast with all proceeds going to charity.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through July 2015 Expiry and sign up here

The post Is JC Penney breaking out? appeared first on Dragonfly Capital.

Dragonfly Capital

Top Trade Ideas for the Week August 31, 2015: Bonus Idea

Written By: DragonFly Capital

fifth-harmony-bb3-2015-billboard-03-650

Here is your Bonus Idea with links to the full Top Ten:

Fifth Harmony has nothing to do with Fifth Third Bancorp, $ FITB, but if they were smart they would find a way to work the girl group into their plan. They are an interesting company as they have bought up almost every derivation of 5 and 3 websites to direct traffic to their site.

The stock had a good run higher in 2015 until reaching a consolidation zone in June. The market sell off hit it hard, dropping the price over 10% before a bounce late last week. Through that it made a higher low to go with the higher high near 22. On a Measured Move that would project to a high at 22.85.

The RSI is climbing again too. In fact on a broad scale there is now a Positive RSI Reversal in play against that January low that reinforces the 22.85 target. The MACD also turned back high off the low and is losing in on a positive cross. The stock sits at the 200 day SMA going into the week and in the lower half of the Bollinger Bands®. And it has short interest under 2%.

Looking at the options chains the September Expiry has large open interest on the Put side above at 21 and the Call Side at 22. These could draw the stock higher into expiration. In October contracts are just starting to build with the preference being the 18 Strike Put, possibly as protection and the 20 Strike Call. The October Strike expires the day after the expected earnings report on the 15th.

Fifth Third Bancorp, $ FITB
fitb

Trade Idea 1: Buy the stock with a stop at 19.30.
A straight stock trade.

Trade Idea 2: Buy the September 20 Calls (58 cents).
A defined risk method to participate in an upward move.

Trade Idea 3: Buy the September 20 bullish Risk Reversal (2 cents).
Adds leverage and risk of ownership at 20.

Trade Idea 4: Buy the stock with a October 18/21 Collar (3 cent credit).
An entry to the stock with protection for earnings.

Premium Content
The Best

The Rest Premium

Free Content
The Rest

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above.

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the unofficial last week of Summer sees the equity markets have dodged a bullet, but still need to prove they have the strength to continue and not get pulled lower.

Elsewhere look for Gold to continue to bounce in its downtrend while Crude Oil continues higher. The US Dollar Index is biased to the upside in consolidation while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets both look to continue their bounce in the downtrends, and may turn into reversals.

Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ, despite their rebounds higher. Their charts all show signs of both promise to the upside but further risk or another turn lower. Best to keep all long trades on a tight leash. Use this information as you prepare for the coming week and trad’em well.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through July 2015 Expiry and sign up here

The post Top Trade Ideas for the Week August 31, 2015: Bonus Idea appeared first on Dragonfly Capital.

Dragonfly Capital

Top Trade Ideas for the Week of August 31, 2015: The Rest

Written By: DragonFly Capital

Here are the Rest of the Top 10:

Choice Hotels, Ticker: $ CHH
chh

Choice Hotels, $ CHH, had been falling along trend support since the beginning of March. Last Monday it broke that support and was bought , printing a Hollow Red Candle, showing the intraday strength. It then rose the rest of the week closing over resistance, and making a higher high. The RSI is moving up through the mid line as the MACD climbs, both supporting more upside.

Dril-Quip, Ticker: $ DRQ
drq

Dril-Quip, $ DRQ, had fallen along with Oil, with trend resistance driving it down. August accelerated that culminating in a bottom last Monday. Since then the price has rising back through resistance and over the 50 day SMA. With a rising RSI, now in the bullish zone, and rising MACD, look for more upside.

Fiserv, Ticker: $ FISV
fisv

Fiserv, $ FISV, has been moving higher along a rising channel since October 2014. A great long term stock. It spent most of the time in the top half of the channel, with only the 2 sell offs in October 2014 and last week driving toward the bottom. Despite the drop and recovery last week the SMA’s continue to show a smooth rise higher. The RSI is back at the mid line and rising with the MACD turning up , moving towards a bullish cross. And there is room to the top of the channel for a good short term profit.

Infosys, Ticker: $ INFY
infy

Infosys, $ INFY, had been moving in a very broad channel until pulling back. The bottom last Monday closed a gap from mid July and the recover closed smaller gaps higher. The last 3 days have exhibited a bullish 3 Advancing White Soldiers pattern, calling for more upside price movement. The bullish and rising RSI and the MACD turning back higher both support that case too.

JD.com, Ticker: $ JD
jd

JD.com, $ JD, had built a Cup and Handle pattern over the last year. But that pattern failed when the price broke below 28 three weeks ago. The stock then retraces the entire leg higher from December with the low last Monday and finally bounced. The stock is now building energy as it consolidates under resistance. The RSI is moving back higher and the MACD is crossing up. Both would support a move higher, but wait for a break of price over the resistance line.

Up Next: Bonus Idea

The Best

If you like what you see sign up for more ideas and deeper analysis using the Get Premium button above.

After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which, heading into the unofficial last week of Summer sees the equity markets have dodged a bullet, but still need to prove they have the strength to continue and not get pulled lower.

Elsewhere look for Gold to continue to bounce in its downtrend while Crude Oil continues higher. The US Dollar Index is biased to the upside in consolidation while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets both look to continue their bounce in the downtrends, and may turn into reversals.

Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ, despite their rebounds higher. Their charts all show signs of both promise to the upside but further risk or another turn lower. Best to keep all long trades on a tight leash. Use this information as you prepare for the coming week and trad’em well.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through July 2015 Expiry and sign up here

The post Top Trade Ideas for the Week of August 31, 2015: The Rest appeared first on Dragonfly Capital.

Dragonfly Capital

My Thought Process– $SPY

In three trading days we moved from a range bound low volatility market to an environment of fear and chatter of market collapses. It is more difficult to predict price patterns when extreme volatility and fear are in play versus when the market is more subdued and market participants actions can be more easily anticipated. As traders we move into a “move to move” mentality as a powerful reversal is possible at any moment. We saw that both Monday and Tuesday.

After the market has a shockingly fast sell off experienced market participants look for signs of stabilization. Can higher levels hold? Will trading ranges begin to Read more […]
SMB Capital – Trading Education