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.

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TODAY'S BREAKOUTS & BREAKDOWNS

You know what pisses me off the most? People who do the exact opposite of my time-consuming analysis. For example, someone who called me had the nerve to go long the material stocks today. What an idiot, and I’m not afraid to say it either. That was stupid beyond belief. He is now a “long-term” holder. I should have just hung up the phone.

When I highly not recommend something, it’s for a very good reason. Today is one of those days that make that reason reality. Who else gets on my nerves? People still hoping for that huge explosive rally. I guess they can blame it on human nature, but still, people get to a point where they have to see the reality of what’s going on right now and what the market is telling them…right now. We might get a major rally if (when) the House clears the vote, but the market just sold off after the Senate vote. It’s good to stay in all cash once things clear up. If I don’t have prior experience with an experience, then I’m not trading it. It’s like an IPO…I’ll never trade it when it first comes out.

We hit 4 new highs today and 778 new lows. The imbalance between the new highs and new lows is getting larger and larger. To confirm any type of rally, I have to see some type of improvement in the new highs-new lows indices for the NYSE and the NASDAQ. When I say there is an imbalance, this is what I mean:

So my question to the people who are hoping for that major rally is, “How on Earth are we going to rally if the NH-NL lines look like this? The Advance-Decline charts look just as bad. No trend lines needed; these chats remind me of my ski trip at Park City, Utah, more specifically, riding down the double black diamonds with some messed up looking moguls.

We had 3 breakouts today: Atmel (ATML), TreeHouse Foods (THS), and Diamond Foods (DMND). Interestingly, 2 out of three are food stocks, just like my favorite – CPB. I have no clue why they’re doing well, and I don’t care. All I need to know is if they’re the best performing stocks in the entire market. So if you want to go long, don’t do what my friend did, but rather, go for these very, very few stocks that make new 52-week highs. Stocks that are up on days like today exhibit unusual and maybe even supernatural strength. Kidding, but consider these stocks for possible long positions if you need defensive positions.

ATML is a type of swing trade; notice the wide ups and downs. ATML formed a breakaway gap to the upside today and finally has a chance of not hitting $3.20 again in the short-term.

THS formed an ascending triangle and broke out today. These are the types of stocks I would put my money in. I don’t care what the media says what some “guru” is recommending on TV or anything else. There’s only one criterion – the chart must support my decision to go long, and they do.

A similar pattern as THS above, DMND breakout to the upside while almost everything else liquefied into a huge mess. Don’t forget about CPB!

We had many, many breakdowns today. Most of these stocks lost 20% or more of its value. Even with a nice sized rally, some of these stocks are so deep in the hole, they don’t have a chance. It’ll take these stocks below a very long time to stabilize. In the meantime, feel free to short the ones that pullback to resistance, but don’t even think about going long. Here are today’s biggest losers: