market commentary 27feb11

8/7/2019 Market Commentary 27Feb11

1/12

Andys Technical Commentary__________________________________________________________________________________________________

Apple ~ Daily with RSI and Support

A month ago, we pointed out the critical support at 320-322 for Apple. It held thatarea nicely and produced another new high. However, it triggered very sharp DailyRSI divergence in doing so and is now on short term support at 348. A break of348 should cause AAPL to trade down to 326, the next level of support.

The reason why we occasionally think about Apple is because it is the

vanguard of the large corrective move that began in Mar 09. Everyone

is long Apple and the company has 100% Brand recgonition--nobody is

unfamiliar with the Apple story.

Maybe a H&S forming here?

REPRINTED from 2/21/2011


2/12


Apple ~ Daily with Support and Resistance

Because of its importance to the larger market, well probably keep up our watch of Apple, thesingle greatest company in the history of mankind*. The drop from the $365 high was the mostsevere in the last several months, so longs/bulls need to start paying close attention. Last week,we suggested $320-$322 would be the key zone of support in the weeks ahead. Looking at thechart again, it would seem prudent to expand that medium term support area to $318-326--thatwhole area seems critical from a technical perspective. If youre brave enough to short Apple,$351.3 and $354.5 looks like a tight band of resistance for the week ahead.

*Snarky commentary

All Gaps Get Filled


3/12


Smith and Wesson (SWHC) Weekly - Log Scale

SWHC is one of those stocks well occasionally monitor whenever we think things are about to getroiled. Investors tend to flock to guns and canned food companies in periods of extreme uncertainty

and anxiety. From a technical perspective, its been very interesting to observe SWHC oscillate aroundthe 61.8% retracement for such a long period time. This picture has had a bullish look for some timeas it resembles an A-B wave setup with a big C-wave coming. The stock has been showing someliveliness the last few weeks. First and Second levels of support will be 3.76 and 3.54 for the weeksahead. Maybe this is a highly speculative trade worth considering

$3.54

A?

B?


4/12


May 2011 Silver Futures with RSI - Weekly Chart

I dont really have a good handle on the overall Silver wavecount, so I wont even try. Its worth noting a few developments,though. Last week saw a very nice example of a potential dojitop on the weekly. I say potential because a doji requires aconfirming red (down) candle. Bears need to break this marketbelow $31/oz this week. A red body down to $30/oz would be atextbook doji top.

This bearish RSI divergence should becausing some concern to Silver bulls


5/12


May 2011 Silver Futures - 60 min chart

While the previous slide demonstrated a few potentially bearish developments, the shorter term picture isnot bearish. From the $34.32 high, this was an abc corrective pattern lower--NOT impulsive. Presentedabove would be the best count for bearsthat were in the middle of some kind of complex correctionlower. The bullish count would be that it was a simple (abc) down which concluded at $31.71. If thats thecase, May Silver should have no problem taking out resistance at $33.75/oz this week.

(a)

(b)

(c)

-w-?

-x-?


6/12


7/12


S&P 500 ~ Daily with Weekly Support and Resistance

Were not even worrying about resistance points on this weeks update,

because thats not what were watching for. Were waiting on this market tobreak key support or show some sort of peaking pattern. The S1 and S2for this week are 1325 and 1275. Well sell 20% of a Max Short on a breakof the blue uptrend line highlighted here.

REPRINTED from 2/21/2011


8/12


S&P 500 ~ Daily w/RSI

These trendlines had been highlighted the last few weeks. The S&P 500 finally exhibitedsome signs that the bullish uptrends are coming to an end and we might be in the beginningstages of a trend reversal.

Trendline break

Trendline break


9/12


S&P 500: March Futures - 60 min

One of the things we try to do is understand the nature of the moves at what might beimportant inflection points. Is this move down impulsive or corrective? Looking at thefutures only, the move down looks more corrective, which is not great news for S&P500 bears.

The longer term wave count indicates we should witness an impulsive move lower when themarket finally breaks. Not seeing a clean impulse here should be worrisome for bears.

[a]

[b]

[c]

(w)

(x)

[a]

[b]

[c]

(y)

Wave purists suggest ignoring futures markets and only focus

on Cash indices. Because we sometimes see such large moves

overnight on futures market, I dont like to ignore them. So, what

does the cash market look like?


10/12


S&P 500 Cash - 10 min. Chart

Its not the cleanest impulse, but S&P 500 bears can at least legitimately label the move on

the cash chart as an impulse.* There was an extension in the Wave [3] and the Wave [5]was 38.2% of the proposed Wave (1). So, there are certain classic impulsive elements here.As weve mentioned many times in the past, though, impulsive waves should NOT retracemuch more than 61.8%. So, this move shouldnt break much above 1,325, which just sohappened to be our classic chart support from last week. 1,325 seems like a critical number towatch this week.

[1]

[2]

[.4]

[4]

[5]

(1)

[.5]

[3]

[.1]

[.2]

[.3]*I can EASILY apply the count on theprevious page to this move lower.


11/12


S&P 500: Weekly Support and Resistance

1325 and 1344 should be first and second levels of resistance this week. 1275 becomes the

first level of support. As can be seen on this chart, there is decent air beneath the market if1275 breaks.


12/12

DISCLAIMER WARNING DISCLAIMER WARNING DISCLAIMER

This report should not be interpreted as investment advice of anykind. This report is technical commentary only. The author is NOTrepresenting himself as a CTA or CFA or Investment/Trading

Advisor of any kind. This merely reflects the authorsinterpretation of technical analysis. The author may or may nottrade in the markets discussed. The author may hold positionsopposite of what may by inferred by this report. The informationcontained in this commentary is taken from sources the authorbelieves to be reliable, but it is not guaranteed by the author as tothe accuracy or completeness thereof and is sent to you forinformation purposes only. Commodity trading involves risk and is

not for everyone.

Here is what the Commodity Futures Trading Commission (CFTC)has said about futures trading: Trading commodity futures andoptions is not for everyone. IT IS AVOLATILE, COMPLEX ANDRISKY BUSINESS. Before you invest any money in futures oroptions contracts, you should consider your financial experience,goals and financial resources, and know how much you can affordto lose above and beyond your initial payment to a broker. Youshould understand commodity futures and options contracts andyour obligations in entering into those contracts. You shouldunderstand your exposure to risk and other aspects of trading bythoroughly reviewing the risk disclosure documents your broker isrequired to give you.

Wave Symbology

"I" or "A" = Grand SupercycleI or A = Supercycleor = Cycle-I- or -A- = Primary(I) or (A) = Intermediate"1 or "a" = Minor1 or a = Minute-1- or -a- = Minuette(1) or (a) = Sub-minuette[1] or [a] = Micro[.1] or [.a] = Sub-Micro

market commentary 27feb11

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