Hi Everyone
Commodities and commodity stocks have continued to slide, especially Silver after its parabolic run, and the main indices are consolidating. Many stocks forming Bull Flags have rolled over meaning that our breakout points weren’t hit, therefore “no breakout, no losses”. Remember last time I emphasised it’s not just about the indicators, it’s about the method AND the indicators. This is what keeps us safe when the markets are ambiguous and what gets us windfall profits when they’re decisive.
QQQ
The QQQ’s bull flag pattern is potentially turning into a rounded top. The OVI is just above water and it bounced off its previous resistance point of $58. Needs to stabilize here for a bit.
It’s a similar story for the SPY and the DIA which are both forming flag-like patterns with OVIs still just in positive territory. Right now it’s unclear if this is the start of a deeper correction or whether there’s still a bit more in the bull run we’ve just had. With the indices still showing positive OVIs I’m not anticipating an sustained change of direction just yet. If we start seeing distinctly bearish patterns like a megaphone or bear flag, coupled with a negative OVI … then we’d be talking the market down. For now though it could be a brief correction or the market churning (which isn’t ideal for us breakout traders, but again, we have nothing to fear as we have a method of staying safe during such times).
Stock Highlights
AAPL
AAPL still moving sideways in this extended bull flag. All previous comments still hold.
BA
Steepish bull flag forming, following a previously perfect bull flag at th end of April. OVI still positive. May need a bit more rest.
BIDU
A 20-day doji forming on BIDU and this could mean a quick reversal of around $2 if it breaks yesterday’s high. OVI is just hanging on, but just look at the range of the bars to see the increase in volatility. Needs to start forming a neat pattern again.
CVX
Rolling over and has broken the rising trendline to the downside. OVI still positive but it didn’t give us a trade as it never broke up through resistance. Needs to find some support and then we could be off up again. We’ll watch this one and report accordingly.
PM
Really nice bull flag – it’s never going to be a blockbuster but the pattern is neat and tidy for this tobacco stock, which may continue to benefit if institutions are intent on rotating their stock portfolios.
XLNX
Just about the best bull flag I’ve seen today – this is a classic cup and handle. OVI pretty moribund but at least positive here and look at that spike in the OBV, showing new calls being bought.
LSI
Nice pattern but OVI isn’t really helping here as it’s all over the place! In such cases just focus on the pattern itself as the options aren’t liquid enough for us to get a decent OVI reading.
SHOR
A decent bull flag pattern – no OVI reading on this one.
Be patient … Remember, not having a trade on is still a position in itself. Don’t get too antsy to make a trade if you don’t see simple easy opportunities.
Finally, do follow me on Twitter where we can make brief comments on stocks as they present us with opportunities.
All the best
Guy