Switch-A-Roo
Each morning, in my column Trading the Open, I remind traders to
watch for reversals. This morning, we saw exactly what I was watching for, a
reversal in the futures market. Let’s look at the 5-minute chart of the S&P
e-minis.
After trading lower throughout the morning, the futures took out the morning
high and advanced roughly 8 points.
Today’s Watchlist:Â
(
GSPN |
Quote |
Chart |
News |
PowerRating),
(
ELN |
Quote |
Chart |
News |
PowerRating),
(
CHKP |
Quote |
Chart |
News |
PowerRating),
(
VRSN |
Quote |
Chart |
News |
PowerRating)
GlobeSpan
(
GSPN |
Quote |
Chart |
News |
PowerRating) bounced off that trendline that I highlighted last week.
On Monday it’s surging higher and heading toward the next resistance level.
Because so many traders are looking for a short-term rally based on the current
oversold situation, consider being a bit more conservative and tightening your
stops. Set your alerts just over the resistance level set at the end of June.
Should it break through, watch for a short-term opportunity. If there is a close
above resistance, look for a second resistance level near the July highs. Swing
traders should watch for a close above resistance and a continuation move on the
following day.
Elan
(
ELN |
Quote |
Chart |
News |
PowerRating) has held up quite well, despite the market declines. On Monday,
it is completing the right side of its high-level cup formation. Watch for a
move above the top of the cup pattern to provide entries. If it breaks out and
retraces, watch for the former resistance to become a new support level. The
negative aspect of the chart pattern is that volume has been declining for the
last three weeks. Ideally, any breakout will occur with strong volume supporting
the move.
Checkpoint Software
(
CHKP |
Quote |
Chart |
News |
PowerRating) had been consolidating
throughout June and early July. It broke out in the middle of July, but quickly
returned to the trading range. Thursday, the stock traded, intraday, the entire
range of the consolidation. It found support where the 200-day MA, the near-term
bottom, and the long-term uptrend converged.Â
The most intriguing part of the pattern is that following the
high-volume breakout, we saw a retracement on declining volume. At this point,
we’ll watch for a move outside of the trading range. Avoid speculation on
direction and let the price action lead you. It could easily break the trading
range in either direction. Should it break to the downside, watch for support at
100. If it breaks out to the upside, watch for resistance near the highs from
mid-June.
Verisign
(
VRSN |
Quote |
Chart |
News |
PowerRating) has filled the gap from early June. It recently bounced off
both the 200-day MA and near-term support. Watch for a break of support to
provide a short opportunity in a weak market.Â
It could also remain in the near-term trading range. Only time will tell. Let
price action be your guide.
Until this
afternoon,Â
Check back at 2:00PM ET
for Trading the Techs PM.