The Markets staged a nice turn around on Thursday and formed a hammer candle stick. The candle stick is a favorite formation of mine, and after a down trend in this case for the last few days could be a sign of a reversal.

This is not a perfect hammer formation but it’s good enough so keep an eye out for some upside the next few days.

This lesson also points out basic support and resistance strategies. As with any type of charting strategy it is not exact science but the use of it can increase your probabitlity for profits.

This is sometimes called the box strategy which was made popular Nicolas Darvas in the Book – “How I Made $2,000,000 in the Stock Market.” written back in 1961.

If you view the chart below on ANR you will see that it bounced off the $14.50 level 3 times and moved up to a resistance of $22.50. Obviously when it happens the first time you won’t know that these are support or resistance levels until it happens again.

After the third bounce it’s a good chance it will eventually test the top resistance level again. If it breaks above the $22.50 level, this an be called a break out. To play this correctly you would have to give yourself alittle room on the down side.

1. Enter the stock before it makes the second bounce and give yourself a stop loss of atleast .50 in this case incase it doesn’t bounce exactly off the first support level.

2. Enter the stock after the second bounce and it is headed back up with a stop loss at the bounce level.

3. Exit the stock after it test the top levels and failed to break it.

4. If the stock breaks the top risistance and continues upward, use the resistance level as a stop loss, or use a trailing stop if the stock continues much higher.

From my friends over at INO

I was looking over several charts this past weekend and I was shocked to recognize a chart formation playing out before my very eyes. I’ve seen this same formation a million times before, but I just didn’t want to believe it could be happening to my favorite stock, Apple (NASDAQ AAPL). Some would call this denial.

In the past I’ve written extensively about Apple products on this blog.
If you have read any of these postings, you’d know how crazy I am about their products.

Several months ago I discovered a major technical formation that spelled trouble for Apple. I have to admit that I was saddened by this.

This formation was also picked up by our “Trade Triangle” technology.
Our algorithm triggered a sell signal and has continued to suggest a short position for Apple all this time.

I was surprised that we’ve seen this market come down so easily. It seems like every time I visit an Apple store they are always busy and their products always seem to be selling well.

The question is, are we at the end of the iPod era?

Given the chart formation, the double top and pivot point, it seems we are headed lower. The Pivot Point measures down to the $40-$50 range and Apple at $90 still has a long way to go on the downside.

What caught my eye this weekend was a weekly continuation pattern to the downside and the fact that Apple closed at a new weekly low for the year. This is not a bullish sign by any stretch of the imagination.

For this coming week, I expect to see further downside pressure on Apple. I believe that we are going to be looking at the $50-60 dollar range as our target zone. Of course everything within will be tempered by our “Trade Triangle” technology. When our short-term “Trade Triangle”
turns positive, we will close out short positions and take to the sidelines. In my opinion, it’s going to take some time for this market to improve and turn around. The technicals are just too weak at the moment.

The Dow broke down below a 20 day symetrical triangle, although it closed very near the bottom of this trend line we could bounce since charting is not an exact science. If we are to bounce it should happen on Thursday. If the market closes down again, the next logical step is to test the lows made on October 10th. This exact number is 7,773.71. It may not happen in one day but I’m sure will will happen soon.

Until then I sugess you sit on the side lines before openining any new positions.

Lots of bargains in the market but they could get alittle cheaper in the next few days.

Solarfun Power Holdings – SOLF has formed a text book hammer pattern. After a standard down trend, the bottom candle shows that buyers have come back into the markets and reversed the downtrend in one day. This candlestick is the hammer which is shown with the long tail and little body. I believe this one will see some upside here.

From a technical standpoint, it’s time to BUY BUY BUY BUY BUY. BUY SPY, QQQQ, CNP, ATML, ETFC!!! Something is about to happen today and it should be good!

I will post charts up later. SP500 is at a 61.8% retracement point! And there is some important trendline support.

CNP bounced off of horizontal support. Let’s get our hands dirty and dive in traders, investors! Whoo whoooo!!!

For some reason, I can’t post the charts up, but they are signaling to buy the SP500 and Nasdaq. I added more to ATML.

While I am solemnizing over the financials, I am picking myself up also because the equity markets index prices have bottoms and are looking good in our favor.

While we sold out of the financial secot filled PEY a couple of days ago, we are still in AT&T from last year (LOL), SPY, QQQQ, DIA, and our new additions and re-entries last months and this month are CNP and ATML. CNP in the Utilities sector, which is doing very well and even outperforming the S&P500, and so is the Technology sector of which ATML is apart of. There were also recent insider buys in the CNP stock in march.

CNP’s stock is experiencing a monthly entry from the powerful CCI system I have come to favor because of its simplicity and accuracy. Also, CNP has bounce off for the 4th time off of its weekly support trendline. That same line was also the back of another support line. It made a gartley pattern and all of this merged together at the 78.8% fib. support line.

We are looking at the downward trendline as a point of reference to watch for signs to exit at $16.98; however, given the monthly signal and weekly bounce, I have set my main target first at $18.68, which is above the downward trendline (would be a break out) and at a horizontal resistance line. I cannot make any commentary beyond that except to say, “Let’s wait until we get there to see what we should do;” that is, on a weekly basis. Now, on a monthly basis, all I can say is that it looks like it will break above its 52 week high if we break above $16.98, given our monthly CCI signals.