AAPL (Apple) at 404.36 Forming An Evening Star Reversal Pattern amid Bearish RSI Divergence (SELL)

AAPL posted an all-time-high at 426.70 (17 Oct high) before gapping down on 19 Oct, forming an evening star bearish reversal pattern. Since then, it has been consolidating under the 415.99 pre-gap low. The bearish RSI divergence (from 404.50/ 426.70 highs) also points lower. Failure to close the gap above 415.99 would recycle weakness towards a return to 390.75 (Support 1). Clearance below would suggest a lower swing high in place and risk an extension towards the key 354.26/353.02 support zone (Support 2). A breakdown there would expose the key 310.50 reaction low (Support 3) for a retest.

It would take strength above 415.99 to close the gap (Resistance 1). A break above would re-open 426.70 (Resistance 2). An upside breakout there would signal the end of the consolidation and initiate the next upleg towards the equality target at 462.19 (1.0 x354.26/426.70 from 390.75, Resistance 3).

Trading Indication:
Short-term: Sell at 408.0 or higher;
Target at 354.26 and lower;
Stop Loss at 416.0 (2.0%)
Long-term: Possibly buy lower

BAC (Bank of America) at 7.34 Breaking above 7-month Bear Channel to suggest higher (BUY)

BAC extended the rebound off the 5.13 YTD low (04 Oct) to break above the 7-month bear trendline (off 13.86/11.25/10.96 highs). The RSI divergence (from 6.31/5.13 lows) suggests continued strength higher. There is scope for bulls to target 8.80 (Resistance 1). An upside breakout there would signal a base in place and initiate the next upleg towards a series of lower highs starting from 10.05 (01 Aug high) (Resistance 2) then 10.28 (21 Jul) (Resistance 3) which guards 10.96 (07 Jul high) near the 10.91 key reaction low (30 Nov 2010) (Resistance 4).

However, failure to reclaim 8.80 would delay and re-open 6.90 (Support 1). A clean loss would expose 6.03 (Support 2). A breakdown there would form a potential swing high and risk a deeper setback towards the key 5.13 low (Support 3) for a retest.

Trading Indication:
Short-term (or Intraday): Buy at 7.15 or lower;
Target at 8.80 and higher;
Stop Loss at 7.05 (1.4%)
Long-term: Possibly sell higher

SWY (Safeway) at 19.08Potential Rounded Bottom Base Forming to Signal Higher (BUY)

SWY extended the recovery off the 16.06 YTD low (23 Sept) to probe the 18.91/18.99/19.20 resistance zone amid bullish RSI divergence and constructive MACD studies. An upside break above the 19.20 resistance is needed to confirm the base and shift the medium-term focus higher towards 22.50 (Resistance 1) near the base measured target. Further strength above would stage 23.60 (Resistance 2) ahead of 24.28 (Resistance 3).

However, failure to clear 19.20 would negate and re-open 17.26 (Support 1), loss of which would expose 16.12 (Support 2) which shields 16.06 (Support 3).

Trading Indication:
Short-term (or Intraday): Buy at 18.50 or lower;
Target at 22.50 and higher;
Stop Loss at 18.20 (2.0%)
Long-term: Possibly sell higher

M (Macy’s) at 29.73 31-month Bull Channel Underpins Further Advance (BUY)

M has ascended through a 31-month bull channel from (06 Mar 09/12 Aug 2011/07 Oct 2011 weekly lows/16 Oct 2009 weekly high). The recent advance off the 24.38 low (04 Oct 2011) near the bull channel support threatens the 30.62 high (22 Jul 2011) (Resistance 1) on the heels of a bull MACD cross. An upside breakout there would initiate the next upleg towards a series of lower highs starting from 31.55 (05 Dec 2007) (Resistance 2). Further strength above there would allow bulls to seek 33.76 (29 Oct 2007) (Resistance 3) which guards the 35.76 lower high (03 Oct 2007) (Resistance 4).

However, failure to reclaim 30.62 would delay and re-open 28.62 (Support 1). A clean loss would expose 24.38 (Support 2) for a retest. A breakdown there would form a potential swing high and risk a deeper setback towards the key 22.66/21.69 support zone (Support 3).

Trading Indication:
Short-term (or Intraday):
Buy at 29.00 or lower;
Target at 31.55 and higher;
Stop Loss at 28.60 (1.4%)

Long-term: Possibly sell higher

EWG (iShares MSCI Germany Index Fund) at 20.15 Potential Head-&-Shoulders Reversal Pattern Points lower (S-T SELL)

EWG could be forming a potential head-and-shoulders reversal pattern on the 60-minute chart if the shoulders’ support at 19.93 is broken. The downside break would allow bears to target 18.85 (Support 1) near the H-&-S measured target. Further weakness there would expose 17.89 (Support 2) which shields the 16.96 YTD low (04 Oct., Support 3).

However, if the 19.93 support holds, recycled strength above 20.78 would negate and reopen 21.04 (Resistance 1). Clearance above would signal the end of the consolidation and initiate the next upleg towards 21.33 (Resistance 2) then 22.16 (Resistance 3).

Trading Indication:
Short-term: Sell at 20.30 or higher (on break below 19.93);
Target at 18.85 then 17.89 and lower;
Stop Loss at 20.78 (2.4%)
Long-term: Possibly buy lower

IYT (iShares Dow Jones Transportation ETF) at 84.21 2-Month Range Resistance at 86.22 May Cap Short-term (S-T SELL)

IYT posted a new YTD low at 70.82 (04 Oct), just short of the 69.94 key support of the 2010 low (6 Jul 2010), ahead of the powerful recovery through the 84.93 lower high. Further strength would allow bulls to challenge the major 2-month range resistance at 86.22 at 50% retracement of the 101.60/70.82 decline, where a potential swing high is anticipated. A reversal to the downside would re-open 79.06 (Support 1) then 75.36 (Support 2) where bulls may reassert.

However, clearance above 86.22 (Resistance 1) would negate and confirm the 2-month base in place above the higher reaction low at 70.82. Bulls would initiate the next upleg towards 92.02 (Resistance 2) then 94.64 (Resistance 3).

Trading Indication:
Short-term: Sell at 85.50 or higher;
Target at 79.06 and lower;
Stop Loss at 86.50 (1.20%)
Long-term: Possibly buy lower

GMCR (Green Mountain Coffee) at 81.36 Confirming Multi-month Top on Break below Key Support (SELL)

GMCR extended the decline off the 115.96 YTD high via lower highs to probe below the 82.40 low today, confirming another lower top at 96.77. Meanwhile, probing below the key 83.50/82.40 support zone confirmed the double top formation (from 111.42/115.96 highs), initiating the next downleg towards 73.27 (Support 1) then 63.71 (Support 2), possibly 47.81 (Support 3) near the double-top measured target.

It would take recycled strength above 96.77 (Resistance 1) to negate and re-open 108.86 (Resistance 2) which guards 115.96 (Resistance 3).

Trading Indication:
Short-term: Sell at 87.00 or higher;
Target at 73.27 and lower;
Stop Loss at 89.00 (2.30%)
Long-term: Possibly buy lower

PHM (Pulte Group) at 4.25 Bullish Divergence Underscores Further Upside (BUY)

PHM broke out of the 28-day falling trendline (from 30/31 Aug/20 Sep highs) on the heels of a bull MACD cross. The bullish RSI divergence (from 4.09/3.29 lows shown on chart) suggests further upside from current levels. While the 3.86 low (07 Oct) holds, there is scope for an up-leg towards the recent range resistance at 5.16 (Resistance 1). An upside break there would allow bulls to seek 6.31 (Resistance 2) ahead of 7.42 (Resistance 3).

However, a clean loss of 3.86 would negate and re-open the key 3.29 support (Support 1) for a potential retest. A breakdown there would risk a deeper setback to new lows.

Trading Indication:
Short-term (or Intraday): Buy at 3.95 or lower;
Target at 5.16 and higher;
Stop Loss at 3.85 (2.5%)
Long-term: Possibly sell higher

TLT (iShares Barclays 20 year Treasuries ETF) at 119.17 Testing 5-week Rising Trendline amid Potential Bearish Divergence (SELL)

TLT extended the decline off the new YTD high at 125.03 (04 Oct) to test the 5-week rising trendline (from 106.08/111.25/115.76 lows) on the heels of a bear MACD cross on the daily chart. Meanwhile, the bearish RSI divergence (joins 123.87/125.03 highs) suggests that there is scope for further downside. A break below 118.99 near the rising trendline would allow bears to seek 115.76 (Support 1). A breakdown there would expose 111.25 (Support 2) ahead of 106.08 (Support 3).

However, recycled strength above 121.76 (Resistance 1) would negate and reopen 125.03. Clearance above would initiate the next upleg towards the equality target at 133.63 (projected 106.08/123.87 from 115.76) (Resistance 2).
Trading Indication:
Short-term: Sell at 122.00 or higher;
Target at 111.25 and lower;
Stop Loss at 125.00 (2.50%)
Long-term: Possibly buy lower

AOL (AOL) at 12.18 Bull trendline underpins further upside (BUY)

AOL tested the 7-1/2-week bull trendline (off the 10.06/11.07/11.28 lows) which held. Bulls posted a bullish outside day (04 Oct) supported by the RSI studies turning upwards. While the bull trendline holds, there is scope for further upside towards 13.04 (Resistance 1) then 14.92 (Resistance 2) near the wedge upper bounds. Clearance there would stage 14.92 (Resistance 3) which is near the 11-month falling trendline line (off the 27.65/22.47/20.83 highs).

However, a clean loss of 11.28 would confirm the trendline break and risk a 10.06 retest (Support 1). Further weakness there would allow bears to seek the Fibonacci projection at 9.55 (0.618x 16.69/11.07 from 13.04, Support 2) which shields the equality target at 7.41 (16.69/11.07 from 13.04, Support 3).

Trading Indication:
Short-term (or Intraday): Buy at 11.50 or lower;
Target at 14.92 and higher;
Stop Loss at 11.25 (2.0%)
Long-term: Possibly sell higher

GOLD (Randgold Resources) at 99.99 Forming a bearish pennant (SELL)

GOLD declined off a double top (114.50/115.00 highs) to reach 92.50 before consolidating. It is potentially forming a bearish pennant pattern. A break below 94.85 near the lower bounds of the pennant pattern would confirm the pattern and initiate the next legdown towards 92.50 (Support 1). Clearance there would allow bears to seek 89.43 (Support 1) ahead of 82.66 (Support 1).

However, recycled strength above 102.39 (Resistance 1) would negate the pattern and reopen 106.19 (Resistance 1) which shields 115.00 (Resistance 1).

Trading Indication:
Short-term (Intraday): Sell at 100.40 or higher;
Target at 89.43 and lower;
Stop Loss at 102.40 (2.0%)
Long-term: Possibly buy lower