TODAY'S BREAKOUTS & DOUBLE BOTTOMS

I have to say we did well today by forming a double bottom. I went 100% long into the close given the strength of the rally (which didn’t breakdown in the last half-hour). Looking at a 10-day chart (below) what’s so bullish about this is that the right bottom formed slightly higher than the left bottom and we only needed the nearest support level above Friday’s lows. Another great signal for the right bottom is that today’s particular intra-day bottom formed an Adam-and-Eve bottom. Adam’s are spikes down and Eve’s are rounded cups. Together, the Eve bottom formed the higher low that I needed to confirm entering long positions.

We did very well today forming 7 new highs and 865 new lows (that’s an accomplishment this week). We also had stronger volume than yesterday, but still weak comparing Friday’s bottom. That should be your worry going forward – volume.

I found only one clean breakout and it was AirTran Holdings (AAI). All of the airlines jumped double-digits today as oil fell below $70 today. What’s great about technical analysis is that all you need to do is look at the chart and notice the breakdown at the 40-day MA then the 50-day MA and you’ve steered clear. If not, you probably listened to all these pure-fundamental guys preaching on the way down that “it’s just gotta go back up”! The chart tells you exactly how it is and what all market participants are thinking and that’s represented by price action and volume. IF we do go back up, the chart will tell you if it will hold. AAI has one more resistance area at around $3.50 before it’s able to spike to $4.25.


Instead of featuring mostly breakdowns like I have for several days now (like I had a choice), I opted to profile several stocks that exhibited a possible “double-bottom” pattern. This is not to say they’ll all go up, but given the volume and price representation, there’s a good chance that many of these stocks will spike higher (most are in the industrials/materials sector). It could last for only a day or several weeks, who knows, but for the very short-term, I think they’ll be ok. Please use the 20-day MA as initial (major) resistance after (if) they breakout of consolidation resistance. Most importantly, remember to do your own due diligence.

Don't forget to try out the Free Trend Analysis. It's FREE, so give it a shot!

TODAY'S BREAKOUTS & BREAKDOWNS (10-8)

I didn’t write my breakouts & breakdowns yesterday because I was killing myself working on my blog and didn’t feel too well. Seemed like I had my own breakdown!

We had a very neutral trading day today, being bound by even support and resistance areas. Yesterday’s close also provided key short-term support and resistance. Today was also a Doji day for the S&P 500, or a day full of indecision. That can sort of be applied to all three indices, but the S&P 500’s pattern was a textbook definition. The NASDAQ was a Red Hollow day, or a day where the index gapped down but rose throughout the day. The DJIA just formed a regular down day.

Apparently, we still have not seen capitulation and I’ve been suspecting the lack of short-covering as the culprit. Total volume is still down and under normal circumstances; we should have hit “the highest daily volume, ever” records consecutively. The ban expires today (unless the SEC decides to stupidly extend it) and we should see volume pick up and I hope to see that special day where we gap down 300-500 points right at the open and rally throughout the day. That’ll be official capitulation. The market is extremely oversold and I haven’t seen any of my technical indicators go so far off the charts.

As for new highs and new lows, we made 19 new highs and 3,226 new lows. This is greater than any other breadth reading I can think of. As for breakouts, we had only one. Just like the past few weeks, we had so many breakdowns that I could just close my eyes and point at my screen and find a breakdown no problem.

Royal Gold (RGLD) broke out today, one of the very few gold stocks that did so, and just one of the very few in general. Breakdowns are profiled with my comments and how you can prevent having your stock on my “S” list in the future.

Don't forget to try out the Free Trend Analysis. It's FREE, so give it a shot!

READER'S REQUEST - SOLAR STOCKS

Suntech Power Holdings (STP) is forming an ascending wedge with higher lows. I would suggest a long entry point on the day it closes above $50 on strong volume. There must be a clean break through the 200-day MA.

Canadian Solar (CSIQ) formed a descending triangle, broke down, and is now testing resistance at $26. Note the bearish cross over between the 50-day and 200-day MA's. I expect a failure at this level and for CSIQ to hit $21. Make note of the higher lows.

Energy Conversion Devices (ENER) was a favorite long stock of mine, but you can't fall in love! ENER tested the 50-day MA and failed horribly yesterday. I am adding ENER to my shortlist for Monday. Note the lower highs from the double top formation.

Evergreen Solar (ESLR) is also added to my shortlist for Monday. This is a short-covering rally and it appears to be losing steam. Note the doji's at the short-term top signaling indecision. If the stock gaps down below $6, It's an automatic short right at the open.

First Solar (FSLR) formed a descending triangle, broke down, and tested resistance at the 200-day MA and failed. I expect FSLR to head lower and if Monday is a down day, it's a possible short candidate. Note $200 as major support.

Solarfun Power Holdings (SOLF) is a strange stock that is very susceptible to large rallies and the subsequent crashes. There is no clear direction for this stock and if it takes me this long to figure out a low-risk entry point, then I won't trade it.