NUE Follow Up

Last night I showed you NUE and a set up for a long position in the stock.

 Here's the daily chart (you can click on the charts for a larger view). I liked the price pattern in NUE after a pretty decent decline.

This 60 min chart shows you another price pattern and it was on the break out of this smaller triangle that NUE could be considered as a potential long position. A stop can be placed below the support of the smaller triangle or a tighter stop can be placed at the breakout level around $39.40, I'd prefer giving it a little more room. Ultimately we want to see NUE break the larger triangle around $40.40 or so, then we have a chance to see NUE really make some gains. It's a pretty decent looking set up even here and now. I encourage you to create watchlists and set alerts for price levels. If you don't have the software capability, email me and I'll send you some links to programs that can help you out.

GLD/SLV

This post isn't just for our PM traders, but everyone as it addresses a concept that is very common in the market and can give you an edge in timing short positions and as a matter of fact, the concept can be reversed in timing long positions.

Late last week after SLV and GLD had broken major tops, I started talking about the possibility of them bouncing back toward resistance. This use to be a very common setup in technical analysis, it can be found n technical analysis books that are nearly a century old. Through the late 1990's and early 2000's the set up changed, once a stock broke out, you had less then a 50/50 chance of t pulling back (in this case bouncing toward resistance-but for longs, pulling back to support). Stocks would often just take off after the breakout and you had to just buy them at elevated prices or miss the move. Now once again, the concept of the pullback is common in the market and is why I started talking about these two possibly bouncing last week. Although the general concept is back, it's for different reasons, now it has more to due with shakeouts, creating volatility and volume rebates. It's a bit trickier now and often the pullback or bounces are more extreme then they use to be.

 Here's an example of what I'm talking about with ADM and I didn't cherry pick this stock as an example, it was the first stock on the watchlist I had open. ADM shows us a very important support zone for a major top, which was broken starting in at the left side of the white box. Note the bounce back up to former support (now resistance). It use to be that stocks would stop just below that resistance and head back down, it would make for a low risk/high probability short sale. Now, as I mentioned, the volatility is greater, the shakeout factor is greater and we often see a move above resistance, which fools traders in to thinking that the top is now a failed top and they should go long. This is our new edge, many times that break through resistance is a short lived false breakout and an excellent timing indication for a short position, so we can adapt to Wall Street's new behavior and take advantage of it. This new behavior tends to create even more profitable shorts as the longs who bought are at a loss when ADM drops back below the support/resistance level and creates a snowball effect, sort of the opposite of a short squeeze.

It was this concept that had me thinking GLD/SLV may bounce, I had no technical evidence, just the common  of the market. Since then, some technical evidence has emerged.

GLD

 Here's an important consolidation zone, which failed last week after a false upside breakout. The green box is the target area as of now based on the size of the 3C divergence that is present now.

 You can see the downside changed character around this 50-bar moving average on a 5 min chart, and look at today's volume as price moves above that average.

Here's the 5 min 3C positive divergence, the evidence that emerged yesterday.

SLV

 SLV broke down from a similar pattern.

 And has now moved above the moving average this morning.

 Here's the technical evidence in a 3C positive divergence formed yesterday

And here's a rough target. Although I should warn that 3C may continue to strengthen and the target zone could be higher. In any case, a failed break of this bounce, would set up a higher probability trade with less risk. We'll keep an eye on both for some decent opportunities. The bounce can be traded on the long side, although I would suggest an intraday trailing stop as this week should be quite volatile with the Greek vote coming tomorrow.

XOMA Part 2?

 Todays price action in XOMA is exactly why I take double digit gains when I get them in a single day. If you exited at my suggested trailing stop, you made 25% on this trade today. You can always take partial profits and let some run, but make sure to take enough to guarantee a profitable trade. XOMA didn't close like I would have liked to see for follow through buying tomorrow, it closed well off its highs.

 There was a bit of a range that developed today, which is always interesting to me.

The 5 min 3C chart doesn't look bad in the range. I might consider XOMA for another ride should it be able to push past $2.70 on some good volume.

A Few Charts

BCRX (long)

 This is a daily chart, it's a nice looking base that looks like it's just entering stage 2 mark up

 BCRX 30 min

 I would set this as a limit trade with a buy order  >$3.90 and a stop around $3.63, of course you could also raise the stop to the $3.90 area, after all, once t breaks out, it should move up, not down.

CAT (short)

 I've posted on CAT several times. The lower red line is the eventual target.

 The 15 min chart is just not holding up well.

 Today's 1 min chart suggests some early weakness tomorrow. Even if CAT were to bounce with the market, I'd keep this on my short list.

CSUN (long)

 This hourly chart looks like CSUN has put together a nice little base to push further north.

 The 15 min chart suggests a pullback...

 The 50 bar m.a. on a 60 min chart, may be a little deep, but if it made it there, I'd certainly be interested in taking a look, otherwise the pullback may not be so deep.

CTDC (long)

 There's some interesting price/volume action recently

 The 60 min chart looks excellent, almost as if it could take off at any moment.

 The 30 min chart looks excellent as well.

NUE (long)

 NUE looks like it wants to bounce off this consolidation, perhaps to shakeout some short, but the move may be worth the ride nonetheless.

 The hourly chart looks excellent considering the price consolidation (usually signals are harder to see in consolidations).

 The 5 min chart shows what appears to be accumulation right at support, every time NUE hits it.

 I would consider a position here if NUE were to break the short term downtrend line around $39.60, a break of $40.40 and NUE should be on it's way to a decent swing trade.

Closing Stats / Miners Trading System

Today we had a very dominant Price/Volume relationship, it was Close Up / Volume Down.

Of the NYSE composite there were 3358 in the dominant relationship followed by Close Down / Volume Down at 1340 and Close Up / Volume Up at 1157. There were 809 stocks closing down on lower volume.

The Dow-30 had 26 stocks closing up on lower volume and 3 stocks closing down on lower volume; one stock closed up on increasing volume.

The NASDAQ 100 had 77 stocks closing up on lighter volume and a total of 13 decliners.

The S&P-500 saw 409 stocks in the dominant P/V relationship with 57 decliners.

The Russell 2000 had 1349 stocks in the dominant P/V relationship with a total of 453 decliners.

Typically Close Up/Volume down is the most bearish P/V relationship, but it must be looked at within the context of the current market environment. With all 4 averages below their main resistance level (which is the area the market backed away from last week when I said the market needed to pullback and regroup) there won't be a lot of confidence in chasing upside price moves and certainly we won't see volume rise due to short covering until the resistance level is decisively broken. Being this is the case, I'm not overly concerned about the P/V relationship.

The Miners Trading system is still long (both versions) NUGT. The 3% stop loss that is used in the system is at $27.41, today's close was $27.44.

Overall, there seems to be improvement in the technicals of NUGT.

 The 10 min chart shows a base-like formation with a breakout at the $27.50 area. RSI has a positive divergence as well during this time, that looks like a base forming.

 There was also a leading positive 3C divergence in the afternoon today as the triangle matures.

 The daily chart seems to be showing an extensive longer term base forming in the miners, so I'll also be looking at individual names in the group to see if there are any potential long candidates. As I have explained before, the miners are sitting on deposits of gold and silver and comparing the group's price to the price of gold (considering their deposits), the miner groups s trading at the equivalent of about $350 an oz. of gold, a substantial discount that may see some real investment interest, especially with the Dodd/Frank bill banning OTC silver and gold trading.

 Here's the 15 min. chart also showing some substantial improvement at an area that looks a lot like a base.

The 10 min. chart also looks bullish.

Back to the market....

The market actually held up pretty well considering some of the economic data today, such as the Dallas Fed's manufacturing index which came in at a huge miss. This data suggests as the trajectory of recent data suggests that ISM (Institute for Supply Management) when it comes out, will print below 50, which is contraction. All in all, the market took it in stride today.

We also heard from the Fed's Hoenig, a long time fiscal hawk. I mentioned his statements earlier today, but they certainly weren't what the financials wanted to hear. again the market took it in stride.

Also we had a Treasury Auction today of 2 year notes that DID NOT go well. The indirect bid came in at an astonishingly low 22% of the total, the loose translation could be summed up as "Who will be the buyer of Treasuries once the Fed winds down QE2?" Foreign central banks showed little interest in them today, leaving the Primary Dealers to clean up the mess, taking down 64% of the total auction and I'm quite sure they are none-to-pleased to be holding these notes either. Again, the market took it in stride.

In short, sentiment today was strong enough to lift the markets in the face of some not so encouraging news.

PLEASE DO NOT interpret what I have laid out above as a bullish perspective on the market. I've been looking for a market bounce in which to sell (short) in to. My primary view is that the markets are close to the second shoe dropping and if the first one may have been a ballet slipper, I believe the second shoe will be more akin to a steel toe boot. There's a big difference between tactical and strategic, a bounce n the markets is tactical, allowing us to sell short in a much better environment, the selling short the bounce is the strategic view. However we have to be vigilant each and every day, especially as the Greek situation winds up this week.

While financials may be showing signs of a bounce on an hourly chart...

 FAS-Bullish Financials on a 60 minute chart...

The big picture is quite different-(FAZ bearish financials on a daily chart). This daily divergence is much more important then the hourly divergence in FAS, it's longer, stronger and on  much more important timeframe.

I'm going to look through some miners and Chinese reverse mergers (a hot bed of fraudulent companies) as well as run some scans and take a look at breadth indications.

SPY Intraday Stop

If you are short term trading any of the market averages, the trailing stop I suggested earlier today (50 bar moving average on a 5 min chart) has just been hit on the SPY, QQQ and DIA.

Volume has picked up a bit on the break of the moving average

PMS Update

Both SLV and GLD look like they are prepping for a bounce as was my initial feeling last week and the initial data this morning.

 GLD 15 min

SLV 5 min.

AAPL

AAPL looks set to lead the pullback on the NASDAQ 100 which has outperformed the other averages today by a comfortable margin.

 AAPL 1 mn

AAPL 5 min

 The NASDAQ 100/QQQ right at resistance

 The DIA needs to move past the gap and through resistance

The same thing for the SPY.

For the maximum effect as far as a short squeeze goes, t would be most beneficial for all of the averages to break across resistance together so it's a broad short squeeze and not just a tech rotation.

URRE Follow Up

This is the last update on URRE from the 24th of June

I think the news I mentioned last night about the Missouri river flooding a US nuclear power plant may have put some pressure on URRE today, but this may be a chance to get in the trade at a lower cost basis.

 The 60 min chart looks to be very positive

 The 1 min chart is positive in to today's decline.

This is a speculative trade, but using the daily stop around $1.49, theres about $.09 of risk per share in the trade right now. I think that can be easily managed with proper risk management/position sizing.

Just something to think about, I probably wouldn't mention it if the 60 min chart didn't look as good as it does.

Resistance

This area of the gap of 6/23 is likely to get volatile. At the top you see the resistance from last week that prompted me to say the market needs a pullback before attempting to break out above that resistance which is key.

What we were looking for in the pullback was for a positive divergence, showing some strength to take on the resistance level around $129.80.

I think the pullback (in white around price) has accomplished what I was hoping to see. I think the market probably does have enough momentum in 3C to take on the resistance level. Intraday though we may see a pullback to take on this gap first. 3C has been suggesting that to be the case most of the day.

If the market can break the resistance level near $129.80 (SPY) then it may be enough to force the shorts to cover and send us up toward the 50-day moving average.