Hi Everyone
HOW GOOD IS THE OVI !!!
Well you have to admit, the OVI in combination with consolidation patterns is a pretty easy way to make money!
On Friday night I suggested the markets were looking weak and that when the downturn comes it will have been worth waiting for … Well Monday saw a gap down and Tuesday is seeing the beginning of a potential Bear Flag … This could herald a decent and orderly downturn. We really didn’t need hindsight to figure this out.
We’ll start as normal with the indices:
QQQ
Tuesday’s bar will appear in our OVI charts in a few hours time, so I’ve drawn it in by hand. You can see that it’s a consolidating bar from Monday’s gap down. This is looking like forming a flag type of pattern with the OVI continuing to be weak. This could well set up some great trades for us over the next few days, both in terms of the index and its component stocks as well. Support is well and truly broken and now is the time to hunt for bear flags for Nasdaq stocks.
SPY
The SPY is also succombing to gravity and a bear flag looks like it could form tomorrow.
Stock Highlights
First, a couple of stocks we’ve been mentioning recently:
AAPL
It’s really a question of if AAPL can hold Monday’s low. If not, I can see it breaking $320 at least. OVI negative, bearish pattern forming … You normally don’t bet against AAPL though, so be super careful with this one.
The financial stocks have been really struggling as we’ve noted recently. Today BAC and Citigroup formed long-tailed doji bars (not showing on the charts) and GS also rose, so I’m expecting these stocks to make something of a fightback tomorrow.
GS
How easy has this one been? Negative OVI, a consolidation at $150, a bear flag at $140 … it doesn’t get much easier than this! Trying to recover today though (bar not showing)
C
I said Citigroup was looking vulnerable with this bear flag on Friday night … and guess what … it gapped down on Monday but is trying to get back on terms on Tuesday with a very long-tailed doji bar (not showing here).
BAC
Moving into Double Bottom territory soon. Very weak still though on all counts as I’ve mentioned a few times recently. A doji bar today (not showing here) so it looks like this and the other leading financial stocks may try to make a comeback tomorrow.
Ok, now for some new ones:
BGC
I’ve made money from this stock before and it’s soon going to be time to do it again. The OVI isn’t particularly readable but the stock has a delightful habit of moving in steps.
PCLN
Looking vulnerable if it breaks below $490. It just held it today at the close after dipping down to $489.
QCOM
This channel makes our lives relatively easy. The OVI is currently very positive, so if the stock rises above $59, then it looks like a good long candidate. But if the stock breaks down below $55 and the OVI collapses, then we’d look at a potential short.
RIMM
Really looks weak here. If it breaks and closes below the October 2010 low of $42.53 it could fall further. Needs to form a double bottom and hold to have a chance of clinging on here.
SLB
Another channel for us. Above $85 looks positive and below $80 would be considered as a short candidate.
FNSR
Looking for it to break down through $22.20.
PAY
No help from the OVI on this one, but it looks weak moving forward with a decent looking bear flag.
More soon …
All the best
Guy
