Are The Bonds About To Rally?

Above is a Weekly chart of the bond ETF TLT. You'll notice that the 2016 sell off is symmetrical in time and price to the 2015 sell off.  Both declines lasted about 20 weeks and about $24.00. Watch for a potential bottom.

TWTR - Follow The Money

Above is a daily chart of TWTR and in the lower panel is the On Balance Volume indicator. As you can see TWTR is now testing the lower range of its ascending channel and appears to be turning upward thanks to buyout rumors which hit the tape late Friday afternoon. You can read more about that story here.

The On Balance Volume indicator which tracks money flows is clearly diverging from the market. As TWTR  makes a lower low the OBV indicator clearly makes a much higher low setting up a bullish divergence. This suggests money is flowing into the stock and in my opinion is quite bullish setting up a potential rally to the upper channel line. . TWTR closed up $1.19 or 7.04%  from Thursday's close.

Chinese Internet Stocks Showing Relative Strength

Above is a daily chart of KWEB which is the ETF for the Chinese Internet stocks.  Below that is a daily chart of SPY. As you can see while SPY breaks down below the August lows KWEB puts in a much higher low and is now testing the highs for the year.

Some Chinese Internet stocks that are leading the charge are BABA,  MOMO, SINA, SOHU, NTES, and BZUN to name a few.

Stock Market Update

Today the S&P was down about half of a percent which is not much considering how much of a rally we've had since the June lows. Just looking at price action alone would suggest that the bull market is alive and well and at this point it certainly is but what's beginning to concern me is what's happening with volume.

Lets take a look back in June when the Market was making new highs which I've so beautiful shaded (wink). You'll notice within this shaded area we've had 3 down days where the volume exceeded the prior up day's volume. These are known as distribution days and are considered somewhat bearish. As you can see that market subsequently sold off  rather sharply.


Now lets fast forward to today and analyze what we are seeing.. You'll notice in the shaded area which I once again highlighted in such a beautiful fashion that within this sideways consolidation we are seeing 6 days where the volume on down days exceeded the prior up day's volume. This has negative implications especially if we close below the support area which I've highlighted in green.

Support for SPY is at 217 to 21760. Lets take it one step at a time and see how the market handles this area.

Penny Stocks To Watch - TRTC

Penny stocks can be very enjoyable and exciting to trade but they can also keep you on the edge of your seat as they sometimes move faster than you can react.  In the blink of an eye all of your profits can be wiped out or doubled so knowing what you are doing is an absolute must.

Below is a  daily chart of TRTC which is a penny stock I often trade and follow.

Back in March of this year we had a breakout to the upside on heavy volume which was then followed by a pullback and then a sharp rally to the upside. I actually missed the initial breakout but was able to get on board shortly after the pullback.and fortunately caught a piece of the April rally. I think what we are now seeing in TRTC is similar to what has happened back in March which is why I am sharing this post.

Late last month TRTC broke out from a 2 month consolidation base and is now in the process of testing the breakout level. I'm going to keep this stock on the radar for any signs of a bounce off of this support area. What am I looking for?  A large range day to the upside (close greater than open) on good volume...maybe a reversal candle such as a bullish engulfment...maybe a sell off below last week's lows followed by a quick recovery...etc. You get the idea.

SLW - Bullish Breakout Setting Up

Below we have a daily chart of SLW and beneath that is daily chart of  silver (SLV),  As you can see since the August 2nd high SLV has experienced some minor selling pressure while SLW has been supported by an underlying bid.

On Friday when Silver experienced a rather large down day taking out the low from August 5th SLW actually diverged by putting in a higher low. This is my opinion is a sign of strength for SLW.

You'll also notice that SLW  has a double inside day which basically is another way of saying the ranges have been contracting over the past 2 days. This alone can set the stage for an expansion in volatility.

On a VERY short term basis  if SLW can break out above the high from Thursday which is at 31.35 we may see further upside for this stock over the next few days. Lets see how it plays out.

AMZN - Upside Target

Amazon (AMZN) has been enjoying a spectacular rally since the February 2016 lows and has been one of the leading  NASDAQ stocks taking us higher. The question on everyone's mind is how much higher can this stock go. Below is a weekly bar chart of AMZN over the past 2 years.

In MAY the stock broke out above point B and in June went on to test that level before continuing on higher. If you measure the B-C swing and add it to point B you get the 900 area for a potential upside target. Another method for projecting where AMZN may rally to is to simply apply the AB=CD concept. If you take the rally of points A-B and add it to point C you get roughly the 875 area. So there you have it, two different measurements  suggesting if AMZN continues its rally the 875 to 900 area should be the most likely upside target.

Oil Stocks Looking Bullish

The oil stocks have been a bit challenging to trade lately with many mixed signals until now, Below is a  weekly chart of XLE (energy stocks)  and in the lower pane is a weekly chart of Crude oil.

If you look closely at the chart you will see a divergence that's taken place over the last 6 weeks. While crude oil has made a new swing low the XLE has made a higher swing low. This in my opinion is bullish for XLE as it shows there are buyers supporting the market.

Right now XLE is up against a rather significant resistance level at 70 to 71 but given the recent divergence between crude oil and oil stocks I am leaning towards a significant breakout to the upside for XLE.

NASDAQ - Continuation Or Reversal

The indices are holding their breakout levels which is a bullish sign but it appears a few weeks of consolidation would be constructive for this bull market to continue.

Above is a weekly chart of the NASDAQ (QQQ) and as you can see this past week's range has been one of the smallest  weekly ranges we have seen for quite awhile. When you see an inside week after a breakout it is very important to watch the high and low of the prior week as those are pivotal levels which can trigger a move. The two levels I will we looking at is the high of 118.78 and the low of  114.22. A move above 118.78 would suggest further upside while a move below 114.22 could be a sign of a breakout failure.