Gap Season - Earnings Season, every night new companies reporting, new chart patterns to follow (on the same companies and new ones) as end of day patterns will be as old as yesterday's financial newspaper if you don't pay attention to the earnings reports, intraday changes and support/resistance areas on multiple time frames (5/15 minutes, 60 minutes and daily)
During earnings season (about 10 months of the year) the determinating progosticator of up or down days are EARNINGS REPORTS, and Economic reports. Market direction is not determined in a vacuum. One day chart pattern changes is NOT enough to predict any longer term direction. There are no overbought, nor are there oversold charts that are convincing at this moment. Sectors are rotating to a certain degree but even sector rotation is determined by earnings reports. What we're seeing is simply "The pause that refreshes" MGAM SNDK and NTES are excellent examples of that strategy. Even JBLU on our short list for Friday, gapped 'n crapped but the breakdown stalled rather early (66.50) from 68.40 considering there was a downgrade. CA also on our short list from 10/08 is a "special situation" stock which we found the day of the breakdown and the CHART definitely did not predict the breakdown.
Stocks like MRVL and QLGC can easily break out their resistance to higher highs and the determinant will NOT be the charts but rather the earnings report. What we will see this week is a market that rocks and rolls on reports coming out of SNDK, BRCM, IBM, INTC EBAY and QLGC and a few others. Miserable charts like CCMP and SNPS will be good for some "pauses that refresh" before downside continues. Even the Asians (and high profile techs) kicked short sellers in an after hours "panic" and "rally" as they were squeezed out of positions. Let's rock on next week!
If there will be any massive shorting, it will more likely come AFTER the reports and not during "anticipation" so we might be merrily shorting gap ups by Tuesday or Wednesday, but if you are not a gap player, don't expect any clear direction utilizing daily chart triggers. A daily, 60 minute, 5 and/or 15 minute chart is of supreme importance, also the 3-minute if you're playing the 60 to 90 minute minimum longer term daytrade.
YHOO was the catalyst for the the market move period on 10/8, no chart could have predicted it. The building reports at the end of September initiated a surge in that sector (which we called the evening prior). Its the earnings reports that will move the market in the next few weeks (the puppeteer) and the charts will follow along like puppets on a string. Still on the "intraday rally at reversal period" schedule with a bullish lean towards buying above support (usually by 10:30 to 11:00). Any shortable rallies from 10:00 have been covered by the doldrums time period (11:30 - 12:00) allowing for a 2-trend day but nothing for the shorts to sink their teeth into.
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