Friday April 29, 2016
Key Developments :
- Market breaks down on H&S topping pattern.
- End of Month Jumper trade causes eod short squeeze rally.
I don’t usually do a report on Friday but felt compelled to here. We have to remember when trading that Month Ends can be tricky. Fund flows come in on the first and the big boys have to mark their book. Today the market found some buyers at this trendline and reversed course late in the day. Some more upside into 2074 is very possible but that will be a new place to re-establish shorts. I went home flat as the reversal pattern forced me to take profits. At this time the downside target of 2044 is still very much in play but we may see further strength at least in the first session Monday to acquire the double bottom target. We will look to re-short on weakness up near that target or on a confirmed failure of the double bottom pattern, by breaking back into the range below 2063.50 (see chart above). What A rally into 2075-2080 does however, i create an even larger topping pattern. So stay tuned.
I will cover more in the weekend review, so make sure you are watching for that on Sunday.
The Bottom Line:
Despite the effort of the funds and people front run the 1st of the month fund flow trade, the bearish topping pattern is still in motion. At this point, we are still sellers of strength into the H&S neckline.
Do not be suprised to see choppy price action in the right shoulder, much like we did in the left, between March 21 and April 15ish. We could be in a chop zone thru May OpEx. So be prepared for that.
Chart of the Day:
Here was an AAPL day trade. I tweeted out the trade as it setup, but I noted basically how I traded it. The buy point was the neckline retest and I took a partial up at the upper trendline. At that point I raised my stop to the low at the trend retest. I ended up being stopped out on the trend break. However, we protected profits and avoided the volatility.